Dollar drops to new low against euro

The dollar sank to another all-time low against the euro today amid expectations that the US Federal Reserve may cut interest…

The dollar sank to another all-time low against the euro today amid expectations that the US Federal Reserve may cut interest rates again.

The euro bought $1.4197 in afternoon European trading - passing its previous peak of $1.4189, reached yesterday and setting the seventh record in as many trading days.

The dollar has been sliding against the European currency since the Fed last week cut interest rates by a larger-than-expected half percentage point. Since then, disappointing US economic data have stoked expectations that another rate cut could follow.

US data due later today could further weigh on the dollar.

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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. The European Union's statistical agency estimated today that inflation in the euro zone would hit 2.1 per cent in September - jumping from 1.7 per cent in August and putting inflation above the ECB's guideline of just under 2 per cent.