Dollar sinks to new low in Europe as U.S. economy slows to near halt

Associated Press
Published: February 28, 2008

BERLIN (AP) - The dollar dipped to another record low Thursday as the Commerce Department reported that the 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.
    Gross domestic product (GDP) measures the value of all goods and services produced in the United States.
    The 15-nation euro bought $1.5150 in early European trading - up from $1.5120 in New York the previous night and above a record $1.5143 reached earlier Wednesday. The euro gave up a little ground and was trading at $1.5122, still above Wednesday’s close.
    The British pound rose to $1.9846 from $1.9842. The dollar dipped to 106.01 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 $1.50 for the first time since its 1999 introduction early Wednesday, then surged above $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.