Dollar Hits Record Low vs Euro

The dollar sank to another record low Wednesday, with a growing list of economic reports pointing to a worsening U.S. climate.

The euro rose to $1.5302 in afternoon European trading before dropping back slightly to $1.5278. The new low broke through the previous record set Monday at $1.5275.

The euro had bought $1.5208 in New York late Tuesday.

On Wednesday, reports showed that U.S. factories saw demand for their products drop sharply in January, while the country's service sector contracted last month.

They provided fresh evidence of weakness in an economy hit by housing and credit crises -- weakness that has raised expectations that the U.S. Federal Reserve will continue to cut interest rates.

Speculation has mounted that the Fed might cut rates by as much as three-fourths of a percentage point this month. Lower interest rates can jump-start a nation's economy. But they can also weaken its currency as traders transfer funds to countries where they can earn higher returns.

By contrast, the European Central Bank is expected to leave its benchmark rate unchanged on Thursday at 4 percent following two months of inflation in which inflation has run at 3.2 percent -- well above the bank's stated goal of at or near 2 percent.

There is more uncertainty over whether the Bank of England will cut rates from their current 5.25 percent Thursday.

The British pound was up to $1.9945 Wednesday from $1.9859 the previous night.

The dollar rose to 103.82 Japanese yen from 103.14 yen.