U.S. Dollar Falls From Seven Week High on GDP

The dollar fell from a seven-week high as data showed the U.S. economy shrank for the first time in three years, increasing the case for the Federal Reserve to maintain record-low borrowing costs to stimulate growth.

The euro rose from almost a 3 1/2-month low before European Central Bank Governing Council member Carlos Costa speaks tomorrow amid speculation the central bank may expand stimulus next week. Australia’s dollar led gains among major peers on signs corporations’ capital expenditure will increase. China’s yuan ended a five-day skid as some investors judged the depreciation excessive. Declines in the dollar were limited as a separate report showed fewer Americans filed applications for unemployment benefits last week.

“The headline gross-domestic-production number was a bit worse than expected,” said Brian Daingerfield, currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut. “If interest rates continue to decline, we’re somewhat negative on the dollar in the near term.”

Bloomberg

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