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The dollar declined to a one-week low against the yen after reports showed U.S. economic growth and existing homes sales increased less than forecast, damping demand for U.S. denominated assets. “Yields are a little bit lower and that is weighing on the dollar-yen,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “We can tie that back to the slightly disappointing GDP.”
The greenback fluctuated versus its major counterparts after the Commerce Department said gross domestic product rose at a 2.6% annual rate in the third quarter, compared with the 2.8% pace forecast. The euro gained earlier as German import prices in November climbed the most in a decade.
The Swiss franc strengthened to a record against the common currency for a sixth day on refuge demand linked to the euro zone’s sovereign-debt crisis. “The Swiss franc continues to perform extremely well,” said Kathy Lien, director of currency research with online currency trader GFT Forex in New York. “When we move to a stronger growth scenario, countries such as Switzerland that have healthier balances will really outperform.” Portugal’s bond rating may be downgraded one or two levels by Moody’s Investors Service after the company warned yesterday of concern that budget cuts will worsen the country’s “sluggish” growth. Greece may have its credit rating cut to non-investment grade by Fitch Ratings within six weeks. The euro has dropped 10.5% so far this year, the biggest loss among the 10 developed nations. The dollar has lost 1.1% and the yen has added 11.5%.
The pound fell versus the euro after a report showed the U.K. economy expanded at a slower rate than previously estimated in the third quarter. Data from the Office for National Statistics showed Britain’s gross domestic product rose 0.7% in the third quarter. That compares with an initial estimate of 0.8%. Second-quarter growth was revised to 1.1% from 1.2%. Minutes of the Bank of England’s December meeting showed policy makers remained split in their decision to keep the benchmark interest rate at a record low 0.5 percent and the asset-purchase program unchanged at 200 billion pounds.
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