Dollar falls as America exits recession
October 30, 2009
New York - The US dollar fell on Thursday against the euro after government data showed the US economy exited from recession, boosting investor appetite for riskier assets such as the single European currency.
The euro, which has been down against the greenback over the past four sessions, rose to 1.4833 dollars at 2200 GMT from 1.4714 dollars late on Wednesday in New York.
The dollar rose to 91.42 yen from 90.63 yen a day earlier.
Risk appetite among investors increased after government data showed the US economy rebounded from recession in the third quarter, posting its strongest growth in two years after four negative quarters.
The world's largest economy grew 3.5 percent in the July-September period from the second quarter, the Commerce Department said. Most analysts had expected a 3.2-percent reading.
It was the first growth rate since the second quarter of 2008 and the strongest expansion since the 2007 third quarter, when a home mortgage crisis triggered a global financial crisis that hammered the world economy.
"The better than expected report caused risk appetite to surge across the board," said Michael Woolfolk of Bank of New York Mellon.
He said the dollar's rebound earlier this week "was a temporary adjustment in positioning and that the greenback was expected to "continue falling on higher equity prices as long as the Fed delays raising interest rates".
US interest rates were brought down virtually to zero percent by the Federal Reserve late last year in an aggressive move to spur growth. The market expects rates to begin rising again next year.
Wall Street shares rebounded strongly Thursday after the US growth report, with the blue chip Dow Jones Industrial Average chalking up 199.89 points or 2.05 percent to 9,962.58, marking its largest single-session jump since mid-July.
Although news on the US economic expansion sparked a fresh round of buying in risk currencies on Thursday, the market remains cautious on rising unemployment, which could derail expansion, analysts said.
The "sustainability of this recovery depends on the improvement of US labour conditions," said Boris Schlossberg, director of currency research at Global Forex Trading.
New claims for US unemployment benefits fell slightly last week but were higher than expected, government data showed Thursday.
The seasonally adjusted number of jobless claims in the week ending October 24 was 530,000, a decrease of 1,000 from the previous week's unrevised figure of 531,000, the Labour Department said.
It was higher than the 525,000 forecast by most economists.
"The weekly jobless claims provided little help to the bulls by rising to 530,000 from 525,000 projected," Schlossberg said.
"The figure remains stubbornly above the 500,000 barrier and until it drops below that level the market will not be fully confident that the recovery has taken hold."
In late New York currency trading, the pound rose to 1.6561 dollars from 1.6383 dollars a day earlier.
The dollar fell to 1.0183 Swiss francs from 1.0260. - Sapa-AFP
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