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Dollar plumbs fresh lows as Fed cut anticipated Toni Vorobyova The dollar slid to a record low against a basket of major currencies on Monday, weighed down by expectations of a Federal Reserve interest rate cut this week and perhaps another move by the end of the year. The dollar's woes helped to drive oil prices to a new record peak above $93 a barrel and sent gold to a 28-year high above $794 an ounce, boosting the Australian dollar to its highest levels in 23 years and the Canadian dollar to a 33-year peak. The Fed is widely forecast to cut rates by a quarter percentage point to 4.5 percent on Wednesday, while expectations are building for a follow-up cut in December to limit economic damage from the housing market's downturn.
"It's all about the Fed, of course. We are not surprised that we are trading around these levels," said John Hydeskov, senior analyst at Danske Bank in Copenhagen. "Our models based on oil, stocks, stock volatility and rates suggest that we could see much higher levels, around $1.47. But to the extent that we've taken a really, really long rally now, we would not be surprised if we see some profit taking around $1.45," he added. Danske, which entered a long euro/dollar trade on October 10 at $1.4115, raised the target on its position for the third time on Monday, to $1.4510.
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