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FOREX-Dollar falls to 6-week low vs yen after U.S. data

Published 11/24/2009, 04:47 PM
Updated 11/24/2009, 04:51 PM

* Mixed U.S. data lifts yen vs dollar, stocks fall

* U.S. Q3 economic growth revised downward

* Fall in dollar has been "orderly" - Fed minutes

* Higher-yielding currencies drop (Updates prices, adds comments, details)

By Wanfeng Zhou

NEW YORK, Nov 24 (Reuters) - The dollar fell to a six-week low against the yen on Tuesday after a mixed bag of U.S. data kept worries about an economic recovery alive, enhancing the safe-haven appeal of the Japanese currency.

The greenback, however, held steady against the euro and a basket of currencies as losses in Wall Street stocks dented risk appetite and investors were reluctant to place big bets before the Thanksgiving holiday on Thursday.

The U.S. economy grew more slowly in the third quarter than initially estimated, the Commerce Department said. Another report from the Conference Board showed U.S. consumer confidence rose, but sentiment about the labor market remained weak.

Kathy Lien, director of research at GFT Forex in New York, said the mixed economic reports earlier have "instilled a negative tone across financial markets."

But she added that overall, "the markets are very hesitant to take the dollar to any fresh lows particularly against the euro."

In late New York trading, the dollar was down 0.5 percent to 88.54 yen, after hitting a session low at 88.36, the lowest level since Oct. 9, according to Reuters data.

The euro was little changed against the dollar at $1.4960 in choppy trading, but fell 0.5 percent to 132.47 yen.

Revised government data showed the U.S. economy expanded at an annual rate of 2.8 percent, slower than the 3.5 percent pace it estimated last month. Consumer spending, which accounts for about two-thirds of the economy, rose 2.9 percent, instead of the 3.4 percent pace reported last month.

"This (GDP) number is slightly negative for risk appetite because of the downgrade in the personal consumption number," said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, New Jersey.

DOLLAR'S FALL 'ORDERLY'

An index of consumer attitudes increased slightly to 49.5 in November from 48.7 in October. However, the report also showed that more Americans said jobs were "hard to get" in November while those claiming jobs were "plentiful" fell.

The ICE Futures U.S. dollar index, which tracks the greenback against a basket of currencies, was up 0.1 percent at 75.124, off a two-week high of 75.879 hit on Friday.

Federal Reserve officials said the recent fall in the foreign exchange value of the dollar had been "orderly," and appeared to reflect an unwinding of safe-haven demand, according to minutes from the U.S. central bank's November meeting.

But the Fed also said that "any tendency for dollar depreciation to intensify or to put significant upward pressure on inflation would bear close watching."

"The FOMC might become concerned about U.S. dollar weakness, but isn't at present," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. "There is no hint of rate hikes anytime soon."

In an interview with French newspaper Le Figaro, IMF chief Dominique Strauss-Kahn said that the Fund thought the euro currency was probably a bit too strong.

The diminished appetite for risk also pressured higher-yielding currencies. The Australian dollar fell 0.6 percent to US$0.9186, while the New Zealand dollar slid 1.1 percent to US$0.7247.

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