Dollar tumbles to three-year low in New York

The dollar slumped to a three-year low against major currencies on Wednesday and its outlook darkened further as surprisingly soft economic data underpinned expectations that US interest rates will remain low this year. The greenback also fell to a record low against the Swiss franc and against the yen fell below 80.50, the lowest level since major central banks intervened to weaken the Japanese currency on March 18.
Separate reports on Wednesday showed a sharp slowdown in the vast US services sector and less hiring by private companies in April. In late afternoon trading, the ICE Futures' dollar index, which measures the greenback against a basket of major currencies, dropped to 72.696, its weakest level since July 2008. The index has fallen in 11 of the last 12 sessions and is down 7.7 percent this year.
The euro, on the other hand, remained fairly well supported on expectations of higher eurozone interest rates and strong sovereign demand. The single currency rose as high as $1.49404 on trading platform EBS, the highest level since December 2009. It was last at $1.48317, flat on the day. Traders said the euro remained hampered by options barriers at $1.4950 and $1.5000.
They said a move above $1.50 is likely but would probably have to wait until after the ECB meeting. Implied volatility in one-month euro/dollar options gained, rising to 11.20 percent on Wednesday from 10.90 percent on Tuesday, reflecting uncertainty as to the timing of the next ECB rate increase.
In other currencies, the dollar fell to a record trough against the Swiss franc at 0.8554 franc and last changed hands at 0.8615 franc, down 0.2 percent. Against the yen, the dollar sank to 80.44, a six-week low and last traded at 80.56 yen, down 0.5 percent. If it falls further, analysts said it could put markets on alert for official intervention to slow the pace of yen gains.
A strong yen could hurt Japan's export-led economy as it struggles with slow growth and the aftermath of the March earthquake and tsunami. The Australian dollar fell further from a nearly three-decade high of US $1.1012; it was last at US $1.0743, down 0.9 percent.