The dollar weakened versus all its 16 most-traded counterparts as the Federal Reserve’s pledge to keep interest rates at a record low for longer than originally forecast spurred investors to seek higher yields.

The U.S. currency touched a five-week low against the euro after policy makers said yesterday the benchmark interest rate would stay low until at least late 2014 from mid-2013 and as Italian yields fell to a six-week low. The euro rallied earlier as Italian 10-year yields fell below 6 percent for the first time since Dec. 8. The nation sold its maximum target at an auction of zero-coupon and inflation- linked debt today.

The Canadian dollar strengthened to parity with the greenback for the first time since November. Goldman Sachs Group Inc. yesterday recommended its clients buy the Canadian dollar versus the greenback, saying the Fed’s pledge to keep rates low reaffirms a dollar “weakening trend.”

The Australian dollar climbed for a second day versus the greenback after Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said his nation may start buying the Aussie as a reserve currency as soon as early February.