Dollar, Yen slump versus Euro

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The dollar and the yen declined versus the euro after a government report showed the US economy shrank less than economists forecast, reducing the demand for the currencies as a refuge.

The Swedish krona advanced against the euro to the strongest level since December after a government report showed the economic contraction in the Scandinavian country slowed in the second quarter. The US currency headed for a fifth month of declines against the pound, its longest run in five years, after a UK survey showed consumer confidence held at the highest level since April 2008.

“There was no big surprise in the GDP number,” said Thanos Papasavvas, head of currency management in London at Investec Asset Management Ltd, who helps manage $4 billion in currency assets.

“We are underweight the dollar. We think it will continue to weaken on a medium-term basis and we would be using any strength in the dollar as opportunities.”

The dollar fell 1 per cent 1.4213 per euro as of 11.23 am in New York, from $1.4075 Thursday, and was at 94.87 yen from 95.56 yen. The Japanese currency weakened 0.3 per cent to 134.84 per euro.

US gross domestic product contracted at a less-than- projected 1 per cent annual rate after shrinking 6.4 per cent in the prior three months, the most in 27 years, Commerce Department figures showed. Inventories dropped at a record $141.1 billion annual pace, after a $113.9 billion decline.