Dollar Falls as U.S. Data Show Slower Growth in Third Quarter

By Oliver Biggadike and Bo Nielsen

Nov. 24 (Bloomberg) -- The dollar fell against the yen, extending declines after reports showed the U.S. economy expanded at a slower pace in the third quarter than initially estimated and home prices dropped from a year earlier.

Japan’s currency gained against all 16 major currencies tracked by Bloomberg and is set to post its first monthly increase versus the greenback since September. The euro traded within 0.1 percent of its one-week high against the dollar as German business confidence rose more than forecast in November. The Federal Reserve is scheduled to release the minutes from its Nov. 4 meeting at 2 p.m. today in Washington.

“People today are looking at better data in Europe versus a downward growth revision here,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “Any negative data could cause people to shirk the risk-seeking trades.”

The dollar fell 0.6 percent to 88.47 yen at 9:18 a.m. in New York from 88.97 yesterday, after touching 88.36, the lowest level since Oct. 9. The euro traded as high as $1.4988, approaching the one-week high of $1.4999 set yesterday and on Nov. 17.

The MSCI World Index of shares slid 0.2 percent after earlier dropping as much as 0.6 percent, and futures on the Standard & Poor’s 500 index rose 02 percent.

“In the current environment a weak U.S. gross domestic product number weighs on sentiment,” said Antje Praefcke, a currency analyst at Commerzbank AG in Frankfurt. “Traders are a little more sensitive to sentiment changes because they want to get out of positions ahead of the long U.S. weekend.”

U.S. Growth

The U.S. government’s revised figures for third-quarter gross domestic product showed the world’s largest economy expanded at a 2.8 percent annual rate, compared with the 3.5 percent estimated last month, according to a Bloomberg News survey.

The S&P/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year-over-year decline since the end of 2007.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

Last Updated: November 24, 2009 09:22 EST