Euro surges to record high
(dpa) - The euro surged to an all-time high Wednesday as expectations of further US rate cuts lead to the dollar slumping to below 1.50 against Europe's common currency.
Moreover, the dollar could come under renewed pressure as the trading day unfolds in Europe ahead of a fresh batch of US economic data and before US Federal Reserve Chairman Ben S Bernanke's testimony before the US Congress, when he could hint at further reductions in borrowing costs.
The euro climbed to 1.5047 against the greenback Wednesday, which was the highest point since the single currency was introduced in January 1999, with the dollar's fall resulting in oil prices climbing again back up above 100 dollars a barrel.
By early morning European trading, the euro was trading at 1.5043 and oil was trading at 101.15 dollars a barrel.
The euro's rise also came as analysts began to rethink their projections for interest rates in the 15-member eurozone after a key survey released Tuesday showed business confidence in Germany recording its second monthly rise this year.
The business sentiment survey drawn up the Munich-based Ifo institute added to expectations that the eurozone might be unable to withstand the global slowdown triggered by the US mortgage market crisis.
Many economists believe that signs that the eurozone economy remains on a growth path will allow the European Central Bank to keep rates on hold at 4.0 per cent for sometime and to avoid launching a rate-cutting cycle.
Up until now, the consensus among economists was that the European Central Bank (ECB) would follow the Federal Reserve and other leading central banks and begin trimming rates in the coming months.
However, the euro's ascent is likely to once again fuel concerns about the impact of the strong currency on the eurozone's key export machine.