Euro hits record against dollar on Fed half-point cut

NEW YORK, Sept 18, 2007 (AFP) – The euro jumped to a fresh all-time high on the dollar Tuesday as financial markets were caught off-guard by a half-point cut in key US interest rates announced by the Federal Reserve. The pound rose to 2.0128 dollars from 1.9945.

The dollar lost ground against most other major currencies except the yen after the central bank’s aggressive move to head off a US economic downturn.

The single European currency rose as high as 1.3988 dollars, an all-time record, before settling at 2200 GMT at 1.3976 dollars, up from 1.3868 dollars in New York late on Monday.

Elsewhere on Tuesday, the dollar gained to 116.05 yen from 115.10 yen late on Monday as the chances of a Japanese rate hike diminished.

The market action came as the Fed slashed its base federal funds rate by a half point to 4.75 percent, in what analysts called a bold move to stimulate an economy imperiled by housing and credit market stress.

Kathy Lien at Forex Capital Markets said the Fed move “represents a very aggressive step by the Federal Reserve to calm the credit markets.”

“They are not going to let inflation risks hold them back from throwing everything they have at the market. This will go a lon