The US dollar has fallen to a record low against the euro as investors bet that the Federal Reserve will cut interest rates to help the economy.
The US dollar dropped to $1.3889 per euro, passing the previous record of $1.3852 that was set on 24 July. Many analysts are predicting that the Fed will cut interest rates next week as it looks to reassure markets and consumers amid a global credit crunch.
The dollar has weakened against the euro for six sessions in a row. “The market’s main focus remains on US economic fundamentals,” said Tomohiro Iwata of Goldman Sachs. He added that investors would be debating whether the Fed would cut rates by a quarter or a half of a percentage point, and what comments they might make following any move.
“Dollar weakness is still the story of the day,” said David Jones of CMC Markets in London. “Markets seem to be expecting a rate cut - I think half a percentage point - and that has been weighing on the dollar,” he explained. (Read more)