MercoPress. South Atlantic News Agency

US recession fears see dollar collapse to 1.50 per Euro

The US dollar has fallen to a fresh record low against the Euro, after weak economic data renewed fears that the US economy may be facing a more serious recession than anticipated.

After figures showed a sharp rise in US home foreclosures, another fall in US consumer confidence and the highest annual rise in production prices since 1981, the Euro hit an all-time high of 1.50 US dollar. Traders say the Federal Reserve may have to cut interest rates again, which would further undermine the dollar. Meanwhile, US crude oil rose 2.20 to a fresh record of 101.43 US dollars a barrel. 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 due to growing recession fears. At the same time, the number of US homes facing foreclosure rose 57% in January (233.000) compared with the same month of 2007 (148.425). Lenders were increasingly forced to take possession of homes instead of auctioning them, suggesting that the owners had very little equity in their houses. There was further bad news from figures showing that US house prices fell for the second quarter in a row. House prices fell 1.3% in the last three months of 2007, compared with the previous three months, according to the Office of Federal Housing Enterprise Oversight. They fell 0.3% compared with the last three months of 2006. 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 turnaround 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. Producer prices rose 7.4% from January 2007, while they were up 1% from December 2007, the Labor Department said on Tuesday. Monthly core producer prices which exclude food and energy costs rose by a greater-than-expected 0.4%. Producer prices increases tend to show up earlier than in consumer or retail prices figures. US interest rate cuts generally lower the value of the dollar as traders move to currencies with a higher rate of return.