The dollar slid to its lowest in months against most major currencies this evening, after weak US factory data reinforced expectations of a cut in benchmark interest rates next year.
The dollar slumped to a 20-month low against the euro and a 14-year low against the British pound after the Institute for Supply Management's survey of national manufacturing in November showed its key index at the lowest since April 2003, at 49.5. A reading under 50 indicates a contraction.
The report compounded concerns about a slowing in the US economy, following data yesterday which showed that business activity in the Midwest shrank in November for the first time in three and a half years.
The dollar fell to a 20-month low against the euro for an eighth day in a row today. The euro peaked at $1.3348, moving closer to its record high of $1.3667 hit in December 2004, before easing back to $1.3330 this evening.
The dollar could keep weakening because of imbalances in the US economy but was unlikely to suffer an abrupt fall, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said today.
