The dollar tumbled further on Friday, hitting a 31-year low against the Canadian dollar and edging near a record low against the euro as investors dumped the US currency after the Federal Reserve's aggressive rate cut this week.
Support for the dollar has crumbled, dragging it to a 15-year trough versus a basket of currencies and pushing the US currency above the psychological $1.40 level against the euro in the previous session.
A 50 basis point cut in the fed funds rate on Tuesday has battered the dollar as it has tarnished the appeal of assets denominated in the currency. Traders see this trend continuing given expectations that the Fed may cut rates again this year.
"We ha- a weak dollar, weak Treasuries and weak stocks," said Hiroshi Yoshida, forex manager at Shinkin Central Bank. "There's been a move towards overall US-selling."
Bucking the broad trend, the dollar and other major currencies edged up against the yen, partly on Japanese investment trusts buying foreign assets before a three-day weekend in Japan. Tokyo markets will be closed on Monday. The dollar climbed 0.2 percent from late levels in New York to 114.85 yen recovering from a low of 113.98 yen hit the previous day.
The euro edged up 0.1 percent to $1.4091 nearing $1.4099 hit on Thursday - the highest since the single European currency was launched in 1999. The single European currency has surged around 1.6 percent in the past week, its biggest weekly gain since November.
Against a basket of currencies, the US currency was at 78.537, near a 15-year low of 78.450 hit on Thursday and approaching a lifetime low of 78.190. Market participants pointed out that speculative positions favouring emerging currencies - like Asian ones - remain quite low, suggesting that there remains room for more dollar weakness.
Comments from Fed Chairman Ben Bernanke on Thursday that global financial losses stemming from disarray in the US subprime mortgage market has "far exceeded even the most pessimistic estimates" did few favours for the dollar as they suggest more credit woes may be on the horizon.
The US currency was also stung by climbing commodity prices, as oil hit a lifetime high in the previous session. Some analysts said that speculation that Saudi Arabia may ditch its peg to the dollar was also dogging the currency.
The Canadian dollar rose 0.5 percent against the dollar to C$0.9945 to hit its strongest in 31 years, after having muscled beyond parity on Thursday for the first time since late 1976. The euro climbed as much as around 0.4 percent to 162.07 yen while the Australian and NZ currencies jumped as much as roughly a percent each.