Weak U.S. growth, debt fears weigh on dollar

[ej510]

Source: Market Watch

Buck retreats against yen, Swiss franc; rising yields undercut euro

SAN FRANCISCO (MarketWatch) — The dollar fell Friday toward its lowest level ever against the Japanese yen, hit an all-time low against the Swiss franc and weakened against the euro after data showed the U.S. economy expanded at a pace slower than expected in the second quarter.

Meanwhile, the euro remained lower against most major currencies after Spain was put under review for a downgrade, heightening worries about Europe’s own debt crisis and its impact on the region’s shared currency.

The dollar index DXY -0.42% , which tracks the U.S. unit’s performance against a basket of six other currencies including the euro, fell to 73.783, off from 74.4507 early Friday as well as 74.210 late Thursday.

A report from the U.S. Commerce Department Friday showed the economy in much weaker shape than anticipated, with gross domestic product expanding at a 1.3% annual rate in the second quarter, below the 1.6% growth rate economics expected. Read more about the GDP data.

>snip

“This was highly correlated to gold which enjoyed a quick bounce to the upside,” he said. “We would imagine that new bets are set up for early Monday morning’s open in Asia — all of it setting up new bearish positions for the U.S. dollar and new highs for the swiss franc and gold.” Read about the rally in gold.



Read more: http://www.marketwatch.com/story/dollar-drops-after-us-debt-bill-vote-cancelled-2011-07-28?dist=beforebell