FOREX-Dollar down vs euro, yen after US. GDP data

The dollar slumped to multi-week lows against the euro and the yen on Friday after a report showed U.S. economic growth cooled in the first quarter, raising the prospect of further stimulus from the U.S. Federal Reserve.

The weaker-than-expected growth showed businesses cut back on investment and restocked shelves at a moderate pace at a time when investors are worried that a lack of job creation will stem consumer spending.

The euro was already higher after a smooth Italian bond auction eased concerns over peripheral euro-zone debt markets.

The sale offset jitters sparked by a downgrade of Spain's sovereign debt and dismal Spanish economic data.

The U.S. economic data added to the dollar's woes, sending it to its lowest since mid-April against the yen.

"GDP was worse-than-expected, and that increases the chances of the Fed launching QE3," said Daniel Hwang, senior currency strategist at Forex.com in New York. "Markets shrugged off the Spanish rating action, and we could see risk assets continue upward momentum on expectations of a Fed move. This is negative for the dollar as it increases QE3 chances."

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