*NEWS*ANOTHER NEW LOW FOR THE U.S.DOLLAR

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*NEWS*ANOTHER NEW LOW FOR THE U.S.DOLLAR

 user 2007-09-28 at 11:48:00 am Views: 54
  • #18809

    Another New Low for the Dollar
    The dollar hit another new low Friday as U.S. inflation data reinforced expectations that the Federal Reserve may cut interest rates again.
    The 13-nation euro reached $1.4207 in late afternoon European trading – exceeding its previous peak of $1.4189, reached Thursday, and setting the seventh record in as many trading days. The euro had bought $1.4160 in New York late Thursday.The euro spiked above $1.42 after the release of data showing that a key measure of inflation in the U.S. eased last month to the slowest pace in 3 1/2 years.The 1.8 percent rise in core inflation over the past year, which excluded energy and food, was within the Fed’s comfort zone for core price increases of between 1 percent and 2 percent, meaning they could cut again.The data also showed that incomes rose by 0.3 percent last month, slightly lower than had been expected.In other trading, the British pound rose to $2.0353 from $2.0270 in New York late Thursday. The dollar was down to 115.21 Japanese yen from 115.59 yen.The dollar has been sliding since the Fed last week cut interest rates by a larger-than-expected half percentage point. Since then, disappointing U.S. economic data have stoked expectations that another rate cut is on the way.Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.The European Central Bank held off on raising its rates earlier this month, but has shown no inclination to follow the Fed’s course and cut the cost of borrowing.Higher interest rates are used to combat inflation. On Friday, the European Union’s statistical agency estimated that inflation in the euro zone would hit 2.1 percent in September – jumping from 1.7 percent in August, and putting inflation above the ECB’s guideline of just under 2 percent.