The U.S dollar hit an all-time low against the euro on Monday over concerns that the ailing housing sector could trigger the Fed to cut the interest rate even further.
The U.S currency dropped to the lowest its been in 15 years as data to be released on Tuesday is forecasted to show the lowest home resales in five years. Traders are expecting at least one more interest rate cut by the end
A further monetary easing after the bold half-percentage point rate cut by the Fed last Tuesday could further erode the dollar's appeal. Several Wall Street firms have downgraded their outlook on U.S. gross domestic product over the next several quarters.
The dollar traded at $1.4069 per euro at 11:35 a.m. in New York, compared with $1.4091 on Sept. 21, according to Bloomberg data. The U.S. currency fell to a record for a third day, touching $1.4130 against the euro, which debuted in January 1999.
Interest rate futures are pricing in a roughly 66 percent chance of a 25 basis point Fed rate cut in October, down from 72 percent at Friday's close, Reuters reported. At least one more quarter-point cut has been factored in by year-end on top of any move at the Fed's next meeting in October.
The dollar index, which tracks the dollar's move versus a basket of six currencies, slipped to a 15-year low of 78.313, but recouped some losses to trade at 78.487.
The National Association of Realtors will probably report tomorrow that U.S. home resales fell 4.5 percent last month to an annual rate of 5.49 million, according to the median forecasts.
The New York-based Conference Board is also expected to report a decline, with analysts targeting its index of consumer confidence down to 104.4 this month from 105 in August
The housing industry, now in the second year of its worst recession since 1991, erased 0.6 percent from gross domestic product in the second quarter.