Dollar hits record low vs euro on consumer, housing reports

BERLIN -- The dollar sank to an all-time low against the euro Wednesday with new reports showing consumer prices heading higher and construction of new homes plunging in March to the lowest level in 17 years.

Inflation also rose overseas. The euro reached $1.5968 after the EU's statistical agency Eurostat said that annual inflation rose on higher prices for transport fuel, heating, dairy products and bread. It was the quickest rise in 16 years.

The euro surpassed its previous record of $1.5912 set on April 10 and was well above the $1.5790 it bought in New York late Tuesday.

The euro continued to gain strength with new evidence of inflation likely muffle calls for the European Central Bank to lower its interest rate from 4 percent. The bank's primary mission is to combat inflation.

Lower interest rates can weigh on a nation's currency as traders transfer funds to countries where they can earn better returns, while higher rates are used to curb inflation.

The British pound, which slipped Tuesday on a series of dour economic reports, climbed to $1.9772 from $1.9619.

The dollar slipped to 101.14 Japanese yen from 102.04 yen.

The Labor Department reported Wednesday that consumer prices rose 0.3 percent in March after being unchanged in February.

Core inflation, which excludes food and energy, posted a 0.2 percent rise last month. Both the overall increase and the rise in core prices were in line with analysts' expectations.

It was a different story on U.S. housing, which continues to stoke fears of an extensive recession.

The Commerce Department reported Wednesday that housing construction dropped by 11.9 percent to a seasonally adjusted annual rate of 947,000 units, a much bigger decline than economists had been forecasting.

Building permits also fell in March, signaling even more problems ahead for the beleaguered housing industry.