The US Dollar has fallen to a three week low against the Euro on speculation that the US Federal Reserve will continue to cut its interest rates in an attempt to avoid a recession while the European Central Bank (ECB) keep their interest rates steady. The Euro rose against the US Dollar after a government report revealed that the European service industries went beyond the expected forecast in February.
''The U.S. is in a material slowdown and it feels like a recession,'' said Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto.
Futures on the Chicago Board of Trade reveal traders see a 96 percent chance of a half a percentage point cut on the target rate on the 18th of March. In contrast, traders have increased bets of an interest rate hike by the Reserve Bank of Australia (RBA) by a quarter of a percent to 7.25 percent when they meet in March. New Zealand's borrowing rate is also at a record level of 8.25 percent. The US Federal Reserve has lowered its interest rates a total of 2.25 percent to 3 percent since the 18th of September last year.
In forex trading, the US Dollar has fallen to $1.4827 per Euro, from $1.4814 yesterday, and dropped to the weakest since the first of February. The US currency touched an all-time low of $1.4967 per Euro on the 23rd of November. The US Dollar fell to 107.17 Japanese Yen from 107.40 Yen. The US dollar posted a second straight weekly loss against the Euro, falling 1 percent.
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