Dollar touches record low against euro

NEW YORK – The dollar dipped to a record low against the euro today as investors became more certain that Federal Reserve policymakers will cut a key interest rate when they meet next week, according to Bloomberg News.
The dollar had recovered to $1.3884 per euro by 10:55 a.m. in New York trading, after earlier touching an all-time low of $1.3892. Its previous low was the $1.3852 per euro reached on July 24. The U.S. currency has fallen 6.9 percent from its highest price this year, reached on Jan. 12. The dollar’s decline was in its sixth consecutive trading day, the currency’s longest losing streak since April.
“The Fed will cut later this month and continue to do so this year – at the same time as other major central banks will be holding, and eventually raising, rates – and that’s weighing on the dollar,” Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, told Bloomberg News. “Interest-rate differentials will continue to conspire against the dollar.”
Analysts now expect the Federal Open Market Commission to slash the overnight funds rate by half a percentage point, to 4.75 percent, Bloomberg said. Meanwhile, futures show that by year’s end, the European Central Bank is expected to raise its key rate to at least 4.25 percent, an increase of a quarter of a percent.
“The Fed should cut rates by a half-percentage point, as the economy’s outlook has worsened,” said Masashi Kurabe, currency manager at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “European rates may go up as soon as the markets stabilize. A narrowing interest-rate differential is positive for the euro.”