Dollar hits lows vs. euro for 2nd day in a row
Euro flirts with $1.60 before easing after comments by European Union official.
NEW YORK (AP) -- The dollar hit record lows against the euro Thursday for a second consecutive day, but regained some ground after a European Union official said the 15-nation currency was heading in an "undesirable" direction.
The euro threatened to break $1.60 for the first time ever, trading at $1.5982 in early trading, above the record $1.5978 it fetched Wednesday.
But the euro dropped back below $1.59 after Luxembourg Prime Minister Jean-Claude Juncker said it is moving in a "direction I don't consider desirable." Juncker leads talks among finance ministers from the 15 countries that use the currency.
Group of Seven finance officials last week promised vigilance over the rapid decline of the U.S. currency. They said that "there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."
"I don't have the impression that financial markets and other actors correctly and entirely understood the message of the G-7 meeting," he added.
The euro fell to $1.5888 in late New York trading, below $1.5954 late Wednesday. The British pound climbed to $1.9916 from $1.9708, and the dollar nosed up to 103.09 Japanese yen from 102.04 yen.
The dollar has been weighed down by a combination of gloomy U.S. economic data and rate cuts by the Federal Reserve. The Labor Department reported higher unemployment claims Thursday, while the New York-based Conference Board's gauge of future economic activity rose 0.1% for March, reversing five months of decline. But the private business group's indicator has shown a 3.3% annual rate of decline since March 2007.
Michael Woolfolk, senior currency strategist at the Bank of New York, said it was not the economic reports affecting trade as much as the "war of rhetoric."
"The leading indicators today came in line with expectations, but Juncker's very dovish comments certainly had an effect on price action today," Woolfolk said. "Going into the G-7 meeting, finance ministers were uncomfortable with the euros strength, particularly against the U.S. dollar. We're now seeing a tug of war play its way out between the hawkish ECB and the European ministries."
The euro's strength in comparison to the dollar makes European companies' goods more expensive overseas, raising fears that exports from the 15-nation euro zone will suffer.
It also makes life more expensive for Americans visiting or living in Europe.
U.S. Army Staff Sgt. Mark King and his wife, Amelia, said the euro's steady rise since they were assigned to Germany in 2005 has crimped their efforts to travel around the continent.
"We can't afford to see Germany and enjoy Europe," said Mark King, of Anacoco, La., as the two ate lunch at a military facility in Heidelberg.
"Really and truly it prevents us from going out and eating," Amelia King said, adding that the couple and their friends increasingly spend weekends at the base barbecuing food bought in dollars.
High inflation in the euro area has fueling expectations that the European Central Bank will keep holding interest rates steady, even as the Fed slashes the cost of borrowing.
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.
In other late New York trading, the dollar rose to 1.0127 Canadian dollars from 1.0018 Canadian dollars late Wednesday, and climbed to 1.0064 Swiss francs from 0.9995 Swiss francs. 
