LONDON (AFP) — The dollar plunged Wednesday to another record euro low thanks to a stream of negative US data, while the tumbling greenback helped crude il and gold prices hit historic highs, analysts said.
The US currency also slid ahead of US Federal Reserve chief Ben Bernanke's testimony before Congress later Wednesday, when he is expected to signal further rate cuts to try to prevent a recession in the world's largest economy.
In early European deals, the euro touched a record 1.5088 dollars, after smashing through the 1.50 barrier for the first ever time on Tuesday. It later stood at 1.5048 dollars, from 1.4979 dollars in New York late on Tuesday.
Against the Japanese currency, the dollar fell to 106.41 yen from 107.24.
In commodity markets, renewed US currency weakness sent gold prices surging to a record peak of 964.99 dollars per ounce, while New York crude oil hit an all-time pinnacle of 102.08 dollars a barrel.
The weak US currency boosts prices of dollar-denominated raw materials because it makes them cheaper for buyers using stronger currencies, which tends to encourage demand, traders said.
"The euro is trading above 1.50 against the dollar for the first time since the eurozone came into existence in January 1999," said Global Insight economist Howard Archer.
"This is primarily a consequence of the dollar being undermined by further weak US data heightening concerns over the US economy and reinforcing expectations of additional interest rate cuts by the Federal Reserve."
Analysts said the euro was boosted by the prospect of favourable interest rate differentials between the eurozone and the United States.
Speculators generally prefer to invest or hold currencies in countries where interest rates are rising or expected to rise in the hope they can increase their potential returns.
Soaring oil prices have diverted petro-dollar revenues into the strengthening European single currency, according to ABN Amro analyst Melinda Smith.
"In addition to the fresh widening in interest rate differentials, one of the key drivers of this move appears to be the surge of oil prices as petro-dollars are channelled into the euro," Smith said.
On Tuesday, the euro had blasted past its previous record peak of 1.4967 dollars that was set on November 23, 2007, to reach as high as 1.5047 dollars.
The single currency got a boost from a better-than-expected German business indicator, which stood out amid a series of lacklustre US reports.
The Conference Board private research group of the United States said its consumer confidence index dived to 75.0 in February from 87.3 in January, when it had also fallen.
US wholesale inflation meanwhile hit a stronger-than-expected 1.0 percent in January due to rising food and energy prices. Stock markets fear that growing price pressures will limit the scope for further aggressive US interest rate cuts.
This year, the dollar has lost considerable ground against the euro amid a US housing slump and a credit crunch sweeping financial markets.
In Europe on Wednesday, the euro changed hands at 1.5048 dollars against 1.4976 late on Tuesday, at 160.12 yen (160.60), 0.7572 pounds (0.7538) and 1.6086 Swiss francs (1.6104).
The dollar stood at 106.41 yen (107.24) and 1.0688 Swiss francs (1.0752).
The pound was at 1.9895 dollars (1.9867).
Later Wednesday on the London Bullion Market, the price of gold stood at 959.73 dollars an ounce from 937.75 dollars late on Tuesday.
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