The dollar fell to fresh record lows against the euro and a basket of currencies on Friday as investors, faced with a run of weak U.S. economic data, anticipated a Federal Reserve interest rate cut next week.
U.S. crude oil's rise to record highs above $92 a barrel and gold's climb to 28-year peaks also hurt the dollar, boosting the currencies of commodity-rich countries such as the Australian dollar which hit a 23-year high against the greenback.
The Aussie was also helped by expectations that the Reserve Bank of Australia will raise rates next month. In contrast, weak U.S. durables goods data on Thursday reinforced bets for a growth-boosting Fed cut on October 31 from 4.75 percent.
The dollar's downtrend remains in place. said Lena Komileva, G7 market economist at Tullett Prebon. In the short run weak U.S. data has led to reinforced expectations of an interest rate cut from the Fed which is bad for the dollar while stronger equities have helped risk currencies.
The euro had risen as high as $1.4377, the highest since its 1999 launch, according to Reuters data. By 6:34 EDT, it had trimmed gains slightly to trade at $1.4364.
Eurogroup Chairman Jean-Claude Juncker said in a newspaper interview published on Friday that he preferred a strong euro to a weak one, adding that the European currency was not yet at alarm-causing levels.
Euro zone money supply annual growth for September came in at 11.3 percent, a slightly slower rate of growth than for August but still well over the ECB's 4.5 percent target.
Analysts said this would add to the European Central Bank's dilemma over the next move for euro zone interest rates.
There is bound to be a big split in ECB ranks now. (The M3 data) will add to hawks' campaign for higher rates but the hawks should be looking to weaker growth momentum as the more important driving force for next year, said Bear Stearns in a client note.
The dollar index -- which tracks its progress against six major currencies -- fell to 77.035, the lowest since its post-Bretton Woods inception over 30 years ago.
The Aussie climbed as high as US$0.9144, while the New Zealand dollar was up a third of a percent at US$0.7648.
The rise in high-yielding commodity currencies, coupled with gains in Asian equity markets, helped boost risk appetite and encourage investors to put on carry trade bets funded by cheap borrowing in the Japanese yen.
The yen fell 0.2 percent to 114.37 per dollar and half a percent to 164.33 per euro.
The yen reacted little to data showing Japanese core consumer prices fell 0.1 percent in September as expected, an eighth straight month of annual decline.
Friday's calendar features the final reading from the October Reuters/University of Michigan U.S. consumer sentiment survey at 10:00 EDT and a speech by Fed Governor Frederic Mishkin on financial instability and the Fed's role in providing liquidity at 4:15 p.m. EDT.
Countrywide's third quarter earnings report may give the dollar further direction, analysts said. Countrywide is expected to post a loss of $700 million to 1.8 billion.
Quite how bad it states delinquencies, falling demand etc could influence market sentiment, ING said in a note to clients.