Dollar slumps to record low
The dollar hit a record low beyond $1.50 to the euro on Wednesday after surprisingly weak U.S. data and comments by the Federal Reserve's No. 2 official reinforced views that the central bank will keep cutting interest rates.
Sterling pares recent gains vs euro, dlrThe dollar also hit an all-time low against a basket of currencies after reports showing U.S. consumer sentiment hit a five-year low and consumer expectations slumped to the worst in 17 years, offering more proof the economy may be in a recession.
Fed Vice Chairman Donald Kohn on Tuesday said that a weak economy was a bigger worry than inflation risks, suggesting a willingness to keep cutting rates from 3 percent as the central bank tackles "difficult times".
The euro initially jumped after a strong reading of German corporate sentiment cooled expectations that the European Central Bank could cut interest rates in the near term from 4 percent.
"We've just gone through a major psychological level, so the market is considering where the euro's next ceiling will be," said Hideaki Inoue, a forex manager at Mitsubishi UFJ Trust and Banking.
The euro surged to $1.5050 on electronic platform EBS, hitting its highest since the single currency was introduced in 1999. The rise above $1.5000 triggered an array of automatic buy orders, traders said.
With the euro having broken into unchartered territory, traders said the market would focus on levels like $1.5100 and $1.5150 where more such buy orders are likely located.
The euro was up 0.1 percent from late U.S. trade at $1.4994.
Traders said the single currency also got a lift as market players in Asia were forced to cover short positions created when the euro fell under $1.45 earlier this month.
The dollar index, which tracks its performance against six major currencies, slid to a record low 74.509 and was last down 0.1 percent at 74.655.
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