Dollar weakens after US lowers growth estimate

AP News
Posted: Nov 22, 2011 3:25 PM
Dollar weakens after US lowers growth estimate

The dollar fell against the euro in choppy trading Tuesday as traders digested bad news from the United States and Europe.

The U.S. government said economic growth in the third quarter was lower than originally estimated. Spain's borrowing costs also soared Tuesday, stoking fears that Europe's debt crisis is spreading to bigger economies in the region.

The Commerce Department said Tuesday that the U.S. economy expanded at an annual rate of 2 percent in the July-to-September quarter, lower that its initial estimate of 2.5 percent.

The euro rose to $1.3509 in late trading, versus $1.3496 late Monday. The euro was moving lower and higher against the dollar throughout the day.

Spain's borrowing costs rose sharply in an auction of short-term debt. Investors are demanding higher interest rates because they are worried that the country will have trouble meeting its debt obligations. They want to be compensated for taking that risk.

Investors are concerned that Spain could become the latest country to get sucked into Europe's debt crisis. Greece, Ireland and Portugal have already been forced to get relief from their lenders after their borrowing rates soared on bond markets.

In other trading, the British pound fell to $1.5628 from 1.5645. The U.S. dollar rose to 76.97 Japanese yen from 76.94 Japanese yen. The dollar fell to 0.9147 Swiss franc from 0.9170 Swiss franc and to 1.0372 Canadian dollar from 1.0385 Canadian dollar.