The dollar skidded lower after news of a record US current account deficit and a weaker-than-expected retail sales report for February that diminished prospects for US rate hikes. The US current account deficit, the broadest measure of trade and investment flows, widened to a colossal new high of 804.9 billion dollars (669.6 billion euros) in 2005 as consumers binged on cheap imported goods, the government said earlier Tuesday. Huge gaps in oil and goods trade pushed the broadest measure of commercial and capital flows up from the 2004 deficit of 668.1 billion dollars, amounting to a record 6.4 percent of gross domestic product last year. "The immediate fallout is not especially damaging," said Brian Dolan, head of currency research at Gain Capital. "However, we expect the dollar to remain under pressure and face new lows once short-term profit-taking has run its course and the macro picture takes hold among the money centre players." "The current account deficit has grown to a point where it arguably cannot be corrected by US action alone," said Michael Woolfolk at Bank of New York. Adding to the dollar's woes was news that US consumers were tightening their purse strings, with retail sales in February falling by a bigger-than-expected 1.3 percent from the previous month, against predictions of an 0.8 percent fall. The dollar accelerated its downward spiral after a report from Medley Global Advisors suggested the Fed may soon wrap up its interest-rate increases. "There have been some reports about a potentially more dovish stance by the Fed, and that's shifting market expectations on interest rates to the downside. That's hurting the dollar today," said Sophia Drossos, currency analyst at Morgan Stanley. Drossos said the market is going to closely monitor the consumer price index readings, due out Thursday, for clues about the US interest rate outlook. Earlier, however, the euro was dented by a disappointing confidence survey out of Germany that said the eurozone's biggest economy was being undermined by the prospects of higher interest rates both in the single currency area and around the world. The ZEW economic research institute's economic expectations index, based on a poll of 311 analysts and institutional investors, fell by 6.4 points to plus 63.4 points in March. In late New York trade, the dollar stood at 1.3025 Swiss francs from 1.3120 Monday.