Dollar Declines to Eight-Month Low on Outlook for Fed Policy

The dollar fell to an eight-month low against a basket of currencies including the euro and yen on speculation the Federal Reserve will increase purchases of government debt to spur the economy.

The U.S. currency was headed for a quarterly loss versus all of its 16 most-traded counterparts as reports indicated the U.S. recovery is stalling as Fed Chairman Ben S. Bernanke is scheduled to testify at a Senate Banking Committee hearing tomorrow. The yen traded near the strongest since the central bank intervened on Sept. 15. Australia’s dollar reached parity with its Canadian counterpart for the first time since 2004.