WASHINGTON (dpa-AFX) - The dollar was hammered on Friday, as a dreadful second quarter GDP report signaled that the U.S. has major problems beyond the debt ceiling crisis playing out in the nation's capital.
Record lows were reached against a number of counterparts, most notably the safe haven Swiss franc, and the dollar dropped toward an all-time low versus the yen set back in March.
The U.S. economy grew at a slower rate than expected in the second quarter, due in large part to sluggish consumer spending. In addition, revised statistics showed that first-quarter growth was slower than people had previously thought.
The Commerce Department revealed that gross domestic product, a measure of broad economic activity, grew at a 1.3-percent annual rate for the April-to-June period.
The buck slipped to a record low CHF 0.7876 versus the Swiss franc. Early losses took the buck to a 4-month low of Y77.03 versus the yen, near the March record low of Y76.30.
The buck gave back early gains versus the euro, slipping to $1.44 by lunchtime. A 4-week low of $1.6455 was reached versus the sterling.
In news from Europe, Moody's Investors Service placed the 'Aa2' ratings of Spain on review for a possible downgrade, citing funding pressures and weak growth environment.
According to Moody's, funding costs of the Spanish government increased and pressures are likely to rise further following the announcement of the official package for Greece.
Eurozone annual inflation slowed unexpectedly in July, but continues to stay above the 2 percent ceiling. The slowdown in economic activity and the unsolved debt crisis coupled with this surprise fall in inflation would possibly lighten the hawkish stance of policymakers.
Inflation fell to 2.5 percent from 2.7 percent in June, the preliminary data published by the European Union statistical office Eurostat showed Friday. Economists expected the figure to remain at 2.7 percent.
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