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Dollar sinks to new low in Europe as US economy slows to near halt

Dollar sinks to new low in Europe as US economy slows to near halt

The euro hit another record high Thursday after the U.S. Commerce Department reported that the American economy braked to a near halt in the final quarter of 2007.
Gross domestic product increased at a scant 0.6 percent pace in the October-to-December quarter, according to the report. The reading on gross domestic product underscored just how much momentum the economy lost in the final quarter, dragged down by a scarcity of credit and a plunging housing market.
That finding pushed the 15-nation euro to a record US$1.5185 in late afternoon European trading _ up from US$1.5120 in New York the previous night and above its previous record of US$1.5143 reached earlier Wednesday.
The British pound rose to US$1.9895 from US$1.9842. The dollar dipped to 105.75 Japanese yen from 106.45 yen.
"With sentiment becoming increasingly pessimistic as to the outlook for the U.S. economy, it seems as if it will take a notable shift in sentiment if we're to see any real recovery," said Gary Thomson, head of sales trading at CMC Markets.
The euro topped US$1.50 for the first time since its 1999 introduction early Wednesday, then surged above US$1.51 after markets took comments from the Federal Reserve chairman as a sign that yet more U.S. rate cuts are on the way.
Fed Chairman Ben Bernanke said that "the economic situation has become distinctly less favorable" since last summer.
Lower interest rates can jump-start a nation's economy, but can weigh on its currency as traders transfer funds to countries where they can earn higher returns.


Updated : 2020-12-03 13:21 GMT+08:00