Dollar falls to record euro low

The dollar is falling as investors worry about the US economy

The US dollar has fallen to a fresh record low against the euro as traders bet that further interest rate cuts will be needed to stem a US recession.

The euro rose to $1.5048 after hitting $1.50 on Tuesday for the first time.

Data issued on Tuesday, showing a sharp rise in US home foreclosures and another fall in American consumer confidence, weighed on sentiment.

Lower US rates tend to send investors in search of other currencies which give a better rate of return.

"Inflation - or perhaps more to the point, stagflation - remains a concern for the Fed," said Gary Thomson, an analyst at CMC Markets.

Five-year low

The latest sign of falling US consumer confidence came from the closely-watched Conference Board survey.

It said consumer sentiment fell to a five-year low in February because of growing recession fears.

At the same time, the number of US homes facing foreclosure rose 57% in January, compared with the same month of 2007.

Last month, the Fed slashed interest rates to 3% as it tried to prevent the US economy falling into recession.

"With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase," said Lynn Franco, a director of the Conference Board's consumer research centre.