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Euro Erases Gains Against Dollar as GDP Growth Trails Forecast

Jan. 27 (Bloomberg) -- The euro erased gains against the dollar after a report showed the U.S. economy grew less than forecast in the fourth quarter, damping demand for riskier assets.

The 17-nation currency was headed for a second straight weekly gain after European Union Economic and Monetary Affairs Commissioner Olli Rehn said Greece was “close” to reaching agreement with its creditors. The yen strengthened against all of its 16 most-traded counterparts.

“The euro turned negative after U.S. GDP was a little on the disappointing side, ” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “The major driver for the market is still what will hopefully come out of Greece.”

The euro was little changed at $1.3109 at 9:14 a.m. New York time, paring the week’s gain to 1.4 percent. The shared currency rose earlier by as much as 0.4 percent. The yen added 0.8 percent to 76.86 per dollar. Japan’s currency appreciated 0.8 percent to 100.74 per euro.

Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual following a 1.8 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 3 percent increase. Excluding a jump in inventories, growth was 0.8 percent.

-- Editors: Paul Cox, Kenneth Pringle

To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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