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Dollar dives to record low against Euro
Fri Oct 26, 9:45 AM ET
The dollar slumped to a record low against the euro on Friday after weak US economic data heightened expectations of a fresh cut to US interest rates next week, dealers said.
Historically high oil prices, which could play a part in slowing the US economy, also kept the dollar under pressure, they added.
In mid-afternoon European trade, the euro struck 1.4388 dollars -- the highest level since the single currency's creation in 1999. It later stood at 1.4384 dollars.
Elsewhere, gold prices rocketed to 778.99 dollars per ounce -- last seen in January 1980.
"Most of the data that has come through this week from the US has been disappointing and has pushed the Fed funds futures market into fully discounting a 25 basis point rate cut from the Fed next week," said Steve Barrow, currency strategist at Bear Stearns.
Government data published Thursday showed the US housing market stuck in the mire, with sales of new homes down 23 percent from a year earlier.
On Wednesday, separate data revealed a sharper-than-expected drop in US sales of existing homes.
The figures have added to the near-universal view that the Federal Reserve will next week cut US interest rates from the current level of 4.75 percent in an effort to bolster the economy.
The Fed last month slashed rates by a hefty half-point to try to shield the world's largest economy from housing and credit market woes.
"With rising commodity prices and weak US indicators, the US economy's slowdown could prompt the beginning of a slowdown in the global economy next year," added Saburo Matsumoto, chief foreign exchange strategist at Sumitomo Trust Bank.
"With the market anticipating that the Fed could cut rates once more by the end of the year, possibly in December, this means that the dollar will be pressured and remain on a falling trend," he added.
Elsewhere, the dollar was also under further pressure from record-breaking oil prices.
Crude futures on Friday surged past 92 dollars for the first time on rising tensions in the oil-rich Middle East following Turkey's military threat against Kurdish rebels in Iraq and new US sanctions on Iran, dealers said.
In European trade on Friday, the euro changed hands at 1.4384 dollars, against 1.4320 dollars late Thursday, at 164.52 yen (163.47), 0.7007 pounds (0.6980) and 1.6726 Swiss francs (1.6696).
The dollar stood at 114.39 yen (114.14) and 1.1632 Swiss francs (1.1656).
The pound was at 2.0532 dollars (2.0511).
In London, the price of gold jumped to 775.60 dollars per ounce at the morning fixing from 767.50 dollars late on Thursday.
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