Euro hits record high against dollar

LONDON (AFP) — The euro set another record high against the dollar on Thursday as dealers waited nervously for the latest round of data on the United States economy.

The European single currency hit 1.4166 dollars, beating its previous record of 1.4162 that was set on Wednesday.

Dealers said the foreign exchange market was jittery ahead of final US second-quarter gross domestic product (GDP) figures and new-home sales due out later Thursday amid speculation about more US interest rate cuts.

In recent days, the dollar hit a series of historic lows against the euro as dealers tracked the outlook for the shaky American economy after the US Federal Reserve slashed borrowing costs to 4.75 percent last week.

"The dollar is unlikely to get a breather today," said Commerzbank analyst Gavin Friend on Thursday.

"A moderate downward revision of the Q2 US GDP and particularly falling new homes sales will generate further selling pressure for the dollar, since in the current environment investors are reacting sensitively to negative US economic data.

"Even though markets are to a certain extent preempting the effects of the (subprime) financial crisis on the US economy ... we expect notably weaker US data towards the end of the year."

The Fed last week dropped its main interest rate from 5.25 percent to 4.75 percent in a bid to galvanise the embattled US economy, which has been battered by the crisis in the "subprime" home loan sector.

Lower US borrowing costs reduces interest in the dollar and boosts the attractiveness of the euro.