Dollar hits new low against euro

BERLIN -- The dollar sank Wednesday to its lowest level ever against the euro after markets took comments from the Federal Reserve chairman as a sign that yet more U.S. rate cuts are on the way.

The 15-nation euro topped $1.50 for the first time since its 1999 introduction in Asian trading, then surged after Fed Chairman Ben Bernanke told the House Financial Services Committee that "the economic situation has become distinctly less favorable" since last summer.

That added to sentiment that the Fed is likely to add to recent rate cuts that already have left U.S. interest rates below those in the euro zone.

The euro surged as high as $1.5143 after Bernanke's testimony -- well above the $1.4967 it bought in New York late Tuesday. It settled back to $1.5120 in late New York trading Wednesday.

Lower interest rates can jump-start a nation's economy but can weigh on its currency as traders transfer funds to countries where they can earn higher returns. Worries about the U.S. economy have helped drive down the dollar for months.

Since Bernanke's last similar assessment, the U.S. housing slump has worsened, credit problems have intensified and the job market has deteriorated. Bernanke said those factors combined to make people and businesses alike more cautious toward spending and investment -- further weakening the economy.

"The U.S. economy is still in a weak period, and we cannot estimate how long that is going to go on," Christoph Schmidt, an analyst with N.M. Fleischhacker Trading Bank in Frankfurt, told AP Television News.

The British pound soared as high as $1.9971 before falling back to $1.9842 late in New York -- below its level of $1.9862 Tuesday. The dollar fell to 106.45 Japanese yen from 107.26 yen.

The dollar fell to 1.0622 Swiss francs from 1.0759 Swiss francs, but edged up to 98.08 Canadian cents from 98 Canadian cents late Tuesday.