Dollar Falls to Three-Week Low

The dollar fell to a three-week low against the euro as U.S. home prices tumbled and consumer confidence sank to a five-year low.

Traders also pushed the dollar to within a cent of a record low versus the euro as producer prices rose more than forecast last month, fueling speculation the Federal Reserve will have less room to cut interest rates to bolster the economy. The euro began its climb earlier after German business confidence unexpectedly strengthened for a second month.

The dollar weakened to $1.4882 per euro at 11 a.m. in New York, from $1.4830 yesterday, and reached the lowest level since Feb. 1. It touched an all-time low of $1.4967 on Nov. 23. The dollar fell to 107.62 yen from 108.07. The euro traded at 160.21 yen from 160.27, after reaching a six-week high.

The U.S. currency extended losses as a government report showed producer prices rose 1 percent in January, after a 0.3 percent decline the prior month, and more than double the median forecast in a Bloomberg survey. Separately, the S&P/Case-Shiller index of home prices in 20 U.S. metropolitan areas fell 9.1 percent in December from a year earlier, the most on record.

Dollar Falls to Three-Week Low, Bloomberg
2/26/2008 9:14:35 AM