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* Dollar hits 8-month low vs yen, third month of declines

* Euro falls vs dollar on Friday; snaps 7-month decline

* U.S. 2nd-quarter growth slows to 2.4 pct on imports

* Chicago PMI for July jumps, offsetting some pessimism
(Updates prices, adds details)

By Nick Olivari

NEW YORK, July 30 (Reuters) – The dollar hit its lowest
since November against the Japanese yen on Friday as data
showed growth in the world’s largest economy is slowing,
reinforcing expectations for low U.S. interest rates into
2011.

Dollar bears sold the U.S. currency against the yen after
the government said in its first estimate that U.S. gross
domestic product expanded at a 2.4 percent annual rate in the
second quarter after an upwardly revised 3.7 percent pace in
the January-March quarter. For details, see [ID:nN29111411]

Analysts said Friday’s report follows a string of weak data
from the United States that has weighed broadly on the dollar.
They added that the data may also hurt demand for perceived
riskier assets, favoring investments in currencies such as the
yen and the Swiss franc.

The dollar fell 2.2 percent against the yen JPY= in July,
the third straight month of declines, while the euro rose 6.7
percent EUR= against the dollar for the month — its best
month since May 2009 — snapping seven straight months of
declines.

“It’s going to be very difficult for a (dollar) rally and
people are going to get more risk averse. You could see euro go
below $1.30 and the dollar fall below 86 yen,” said Boris
Schlossberg, director of FX research at GFT Forex in New York.

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The GDP report “is not helpful to the risk trade or the
dollar-yen since we’re seeing across all U.S. data releases
signs that the U.S. economy really is stuck in the mud,” he
added.

In late afternoon trade in New York on Friday, the dollar
was down 0.4 percent at 86.38 yen after hitting an eight-month
low of 85.95 yen following the GDP report, according to
Reuters. It was the third day of declines for the dollar
against the yen.

Stop-loss sales were triggered earlier at a previous low of
86.25 yen, traders said.

“We’re in a small window where U.S. economic data is
underperforming and keeping pressure on the dollar,” said Lee
Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

“Concerns about the U.S. economy and Fed easing will also
put U.S. yields on the downside, which is a key driver for
dollar/yen,” he said.

The dollar pared some of its losses against the yen after
another report showed a jump in business activity in the U.S.
Midwest in July, but the relief was short-lived.
[ID:nN30265688]

RISING YEN

The yen took comments by Japanese Finance Minister
Yoshihiko Noda that he was closely watching the market in
stride. Deputy Finance Minister Motohisa Ikeda said he was
worried about the impact of a rising yen on Japan’s exports.
[ID:nTFD006497] [ID:nTFD006498]

But traders and analysts said they do not expect Japanese
authorities to intervene to stem the yen’s rise until it goes
beyond 84.81 yen to the dollar, hit in November 2009, according
to Reuters data. That was a 14-1/2-year high for the yen.

The dollar also fell to a six-month low against the Swiss
franc at 1.0364 francs CHF=, but it was last little changed.
The euro fell 0.6 percent against the yen EURJPY= to 112.78
yen and 0.2 percent against the dollar to $1.3053 on Friday.

Traders said the euro’s fall against the yen was related to
redemption flows from Spanish bonds. [ID:nLDE66M1PR]

The euro’s recovery to an 11-week high against the dollar
earlier in the week was partly driven by rising euro zone money
market rates, which fell on Friday [ID:nEAP000492].