USD weaker on signs worst of recession is past

USD weaker on signs worst of recession is past

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The yen and the US dollar both weakened Wednesday on the possibility that the global recession may have bottomed out.

Evidence pointing toward a slight easing of the recession came in the form of a report from the US Commerce Department showing that the US gross domestic product dropped at a 6.1 percent annualized rate in the first quarter after falling by 6.3 percent in the fourth quarter of last year.

The decline was still more than had been anticipated as new data showed that consumer spending was up 2.2 percent in the US in the first quarter while business spent 38 percent less in the quarter and residential construction declined by the same percentage.

US government spending dropped 3.9 percent in the first quarter, with defense spending and spending by state and local governments down during the most recent quarter.

The declines for the greenback also came ahead of a decision on US interest rates by the Federal Reserve, due later in the day.

At just past 11 a.m. in New York, the dollar traded at $1.3268 to the euro while the yen traded at ¥96.96 to the US dollar and at ¥128.6453 to the euro.

The pound, meanwhile, strengthened on quarterly reports that were better than anticipated, with the pound trading at 89.84p to the euro while it took $1.4769 to buy a pound and the yen traded at ¥143.1989 to the pound.

The Mexican peso strengthened to 13.695 pesos to the dollar on hopes that damage to the Mexican economy due to the swine flu outbreak will be limited.