Dollar Falls to Two-Week Low

The dollar fell to a two-week low against the euro after a report showed manufacturing in the Philadelphia region contracted this month, bolstering speculation the U.S. is headed for a recession., Bloomberg 2/21/2008 9:52:37 AM

The U.S. currency posted its biggest decline this month versus the yen as the report sustained bets the Federal Reserve will cut interest rates by a half percentage point in March. The British pound rose the most in a month after a report showed U.K. retail sales climbed more than double the pace forecast.

The dollar weakened to $1.4814 per euro at 11:50 a.m. in New York, from $1.4715 yesterday, and touched the weakest since Feb. 5. The dollar fell 0.5 percent to 107.60 yen, from 108.12, the steepest decline since Jan. 30. The euro rose to 159.38 yen, from 159.09, and reached a five-week high.

The Philadelphia Federal Reserve Bank's general economic index fell to minus 24, the lowest since 2001, from minus 20.9 the prior month, the bank said. Negative readings signal contraction.

The dollar has lost 5.5 percent against the euro since Sept. 18, when the Fed began lowering its benchmark rate from 5.25 percent.

Dollar Falls to Two-Week Low