The 15-nation euro fell to $1.3951 in late New York trading from $1.4033 the night before. Europe's common currency dropped as low as $1.3881 for the session, a point not seen since late September 2007.
The British pound also dropped to $1.7528 from $1.7560 late Wednesday, while the dollar slid to ¥106.73 from ¥107.76 yen last night.
The U.S. Commerce Department reported on Thursday that the country's trade deficit shot up in July to the highest level in 16 months, offsetting strong export growth. The deficit with China climbed to its second-highest level on record.
But Ashraf Laidi, a currency analyst at CMC Markets, said the recent lowering of growth expectations by the European Commission and the European Central Bank has underscored concerns about an economic slowdown in the euro zone in 2008.
"The dollar takes on the role of a safe-haven currency amid escalating worries with the global economy as U.S. authorities have undertaken the most measures in stemming the deepening slowdown," Laidi said.
The Commerce Department said the trade deficit rose by 5.7% to $62.2 billion in July, much worse than the $58 billion deficit that Wall Street expected. It pushed the gap between what America imports and what it sells abroad to its highest level since March 2007.
The trade deterioration reflected the fact that crude oil prices broke through the $145-a-barrel mark in July, pushing America's foreign oil bill to an all-time high of $51.4 billion, up 13.7% from June.
More recently, though, the dollar has been helped by retreating oil prices.
Light, sweet crude for October fell $1.71 to settle at $100.87 a barrel on the Nymex, its lowest close since March 24. Oil prices have fallen nearly 32% since their peak at $147.27 on July 11; the dollar has risen 13% since its bottom against the euro of $1.6038 on July 15.
In other New York trading, the dollar rose to 1.0779 Canadian dollars from 1.0696 the night before, and edged higher to 1.1393 Swiss francs from 1.1344 francs.
Dollar continues to gain ground
