T
he bad news for the US dollar just keeps on coming. The American greenback set yet another record low today as the euro moved up to a high of $1.4966 earlier in the day, breaking yesterday’s record of $1.4873.
The dollar also fell to a new two and a half year low against the yen in Asian trading, as the yen fell to under 108.
Traders are continuing to worry about the fate of the dollar and are now expecting to see another interest rate cut from the Federal Reserve in its attempt to solidify the economy in the face of the current subprime mortgage crisis that has been hampering the market since around August of this year.
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While the decline in the dollar is not helped by the sub prime mortgage crisis, the major issues surrounding the value of US currency is due in part the massive deficits being run by the U.S. economy. In particular, one primary cause is the U.S. budget deficit, currently at $413 billion for the past fiscal year. Hopefully this spending spree that has been going on in Washington will flatten out with the Democrats control of the House and Senate. Also adding to the decline of the dollar is the U.S. trade gap The U.S. has consistently been running a deficit on trade and investment income with rest of the world for some time and the deficit is is expected to top $600 billion this year.