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The euro weakened for a second week, touching a three-month low versus the dollar, as concern builds that Greece may be forced to withdraw from the currency union with the nation’s politicians unable to form a government. The 17-nation currency rose earlier after the leader of Greece’s New Democracy Party said four parties have vowed to remain in the euro if they form part of the next administration. Gross domestic product in the euro area will drop 0.3 percent this year, the European Commission said, reiterating a February forecast. Greece will have the deepest contraction, with GDP shrinking 4.7 percent, while the economies of Spain and Italy are seen falling 1.8 percent and 1.4 percent, respectively.
The yen rose against most of their 16 major peers after JPMorgan Chase & Co. said it made a surprise $2 billion trading loss, boosting demand for safer assets. The yen erased earlier gains against some of its major counterparts after a gauge of U.S. consumer confidence topped economists’ estimates, renewing appetite for some higher- yielding assets.
The pound fell against the dollar, extending a second weekly decline, after an industry report showed U.K. consumer confidence dropped last month as the economy slipped into a double-dip recession. Sterling weakened versus most of its major peers as signs economic outlook is worsening raised the prospect that Governor Mervyn King will hint at resuming bond purchases, or quantitative easing, when the central bank releases its Inflation Report next week.
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