Market Report

The dollar declined against 13 of the world's 16 most-active currencies on speculation slowing U.S. economic growth will prompt the Federal Reserve to reduce its benchmark interest rate next month.

The U.S. dollar fell to a record low versus the euro and the weakest in 26 years against the pound after Fed Chairman Ben S. Bernanke acknowledged in his testimony to lawmakers that the expansion will cool. Economists forecast a report today will show U.S. consumer sentiment was the worst since May 2006.

New Zealand's dollar rose on speculation the U.S. will cut interest rates again, boosting the appeal of the South Pacific nation's higher-yielding assets.

The currency has climbed 10 percent since Sept. 18, when the Federal Reserve cut its target rate a half-percentage point to stimulate economic growth. The Fed reduced it again last week by a quarter-point, widening the gap between the U.S. and New Zealand benchmark rates to 3.75 percentage points.

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The euro gained against 13 of the 16 most-active currencies on speculation European Central Bank President Jean-Claude Trichet will signal plans to raise the benchmark interest rate in coming months. The pound was close to a 26-year high against the dollar on speculation both the ECB and the Bank of England will keep rates unchanged today, as the Federal Reserve considers further reductions in borrowing costs.

The pound's surge to a 26-year high of $2.1072 yesterday may help cool inflation by reducing the cost of commodities priced in the U.S. currency. The pound has gained 7 percent this year as the gap between U.S. and U.K. rates widened. While the Bank of England raised its rate to the highest among the Group of Seven nations in July, the U.S. Federal Reserve has cut its key rate 75 basis points since September, to 4.5 percent.

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