Dollar retreats as U.S. economy grows

Greenback snaps its 4-day streak of gains as government reports GDP grew at 3.5% annual rate in the third quarter.

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By Hibah Yousuf, contributing writer

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NEW YORK ( -- The dollar fell against the euro on Thursday, ending a four-day advance, after the U.S. economy grew more than expected in the third quarter, sending investors back into riskier assets.

The euro climbed to $1.480 from $1.4709 late Wednesday, while the pound advanced to $1.6541 from $1.6375. The greenback edged higher against the yen to ¥ 91.46.

The pullback from the dollar's rebound was triggered by a government report that said GDP grew by 3.5% on an annual basis in the third quarter, ending a streak of declines over four quarters.

The greenback was also supported by a modest drop in initial jobless claims.

Investors sold the perceived safe haven and sparked an advance on Wall Street after three down days.

But the chief currency strategist for, Brian Dolan, said that retreat from the dollar is only a short-term turn in the midst of a larger recovery for the greenback.

"There are a number of holes in the GDP report, and the selling of the dollar will not be sustained," Dolan said. "Incoming economic data will remind investors that economic growth ahead will be extremely weak and fragile, so investment will be on the cautious side and will limit the dollar's weakness."

The dollar has also been pressured by the Federal Reserve's decision to keep interest rates near zero. But Dolan said the Fed is likely to use "more hawkish rhetoric and move interest rates to be dollar supportive."

Though Dolan expects the dollar to return to a firmer position, he said the greenback will not strengthen precipitously. To top of page

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