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The yen dropped against most of its major counterparts as Japan slid into its third recession in a decade and Prime Minister Naoto Kan said he expects the central bank to maintain a flexible monetary policy.
Gross domestic product in Japan contracted an annualized 3.7 percent in the three months through March, following a revised 3 percent drop in the previous quarter, the Cabinet Office said today in Tokyo.
The dollar pared losses against currencies of commodity exporters as data showed Philadelphia-area manufacturing grew at the slowest pace in seven months.
“The market is worried that demand and output in Japan collapsed a lot further than they had thought,” said Steven Englander, head of Group-of-10 currency strategy at Citigroup Inc. in New York. On the U.S. data, “the question is how concerned does this make you that growth is going to disappoint -- and as that concern grows, some of the commodity currencies come under pressure,” he said.
The dollar reversed a loss against New Zealand’s currency after the Federal Reserve Bank of Philadelphia’s general economic index unexpectedly fell to 3.9, the weakest reading since October, from 18.5 a month earlier. Readings greater than zero signal expansion. In another report, the National Associated of Realtors said sales of existing U.S. homes slid 0.8 percent in April to a 5.05 million annual pace.
The franc fell against the euro as Swiss Economy Minister Johann Schneider-Ammann said authorities will consider “appropriate” measures if the currency continues to strengthen.
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