Dollar Index Slides to Lowest in 14 Months

The Dollar Index has fallen to its lowest level since August 2008, dropping to 75.767. The Dollar Index measures the U.S. dollar against the Canadian dollar, Swedish krona, Swiss franc, yen, pound and euro.

Low interest rates and U.S. dollar value have investors treating the greenback as a carry trade, and are selling of their dollars in order to get better returns on higher-yielding currencies.

While the U.S. asserts they want a strong dollar, their practices contradict that assertion, and foreign countries are concerned over their own manufacturing bases which are dependent on a stronger dollar to sell goods in the U.S. at a decent profit.

Of course U.S. manufacturers would like a weak dollar to continue, as that would help prop up the industry; strengthening it and eventually creating more jobs, while also shrinking trade deficits.

Dollar Falls on Economic Data

Comments from Federal Reserve Chairman Ben S. Bernanke that the U.S. economy could possibly contract in the first half, caused the U.S. dollar to slide against the euro for the first time in three days.

"Bernanke confirmed what the market is feeling about the economy," said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon. "It put some pressure on the dollar."

Against the euro, the U.S. dollar dropped by 0.5 percent to $1.5695 in New York, down from $1.5614 yesterday. Other major currencies it fell against were the English pound, Brazilian real, Icelandic krona, Australian dollar, South African rand and the Norwegian krone.

Most traders say there is about an 88 percent chance the Fed will cut the lending rate by a quarter-percentage point on its April 30 meeting. They also say the chances of a half-percentage point cut stand at 12 percent.