The dollar fell to the weakest ever against the euro and to an eight-year low versus the yen after a government report showed the U.S. unexpectedly lost jobs for a second straight month in February.
The U.S. currency touched an all-time low against the euro for the eighth trading day in nine as the report bolstered speculation the Federal Reserve will cut the benchmark interest rate as much as a full percentage point to 2 percent at a policy meeting on March 18.
``There is the view that we're quickly sinking into recession and that the Fed only has a limited ability to offset that,'' said Michael Woolfolk, senior currency strategist in New York at the Bank of New York Mellon Corp. ``We certainly see more dollar weakness from here.''
The dollar traded at $1.5426 at 8:44 a.m. in New York from $1.5380 yesterday, and touched $1.5459, the weakest level since the euro's debut in 1999. The U.S. currency traded at 101.68 yen from 102.67 yesterday, and fell to the lowest since January 2000.
The economy lost 63,000 jobs in February, after a decline of 22,000 in January, the Labor Department said. The median estimate in a Bloomberg survey was for a gain of 23,000 last month.
Futures showed traders saw about a 70 percent chance the Fed will lower its target rate to 2.25 percent at a meeting on March 18, for the sixth cut since September. The balance of bets was on a cut to 2 percent, from 3 percent currently.
The euro surged yesterday after European Central Bank President Jean-Claude Trichet held rates at a six-year high of 4 percent and said there is ``strong upward pressure on inflation'' in the euro region, suggesting he's in no hurry to cut interest rates.
``The dollar's decline will not stop until we see a turnaround in employment and the housing market,'' said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank Limited in New York, before the release of the report. ``I don't see that change any time soon.''
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