NEW YORK, Nov 25 - The dollar retreated against some major currencies on Tuesday as a sharp upward revision in U.S. gross domestic product gave investors the opportunity to book profits after steep gains posted a day earlier. Third-quarter GDP surged to an annual rate of 8.2 percent, more than twice the previous quarter's advance and exceeding Wall Street estimates of a 7.8 percent gain. A month ago, the Commerce department had placed third quarter growth at a 7.2 percent. "These numbers are obviously very positive. But there has been marginal reaction on the dollar so far," said John McCarthy, director of foreign exchange at ING Capital Markets in New York. "But if we don't see the dollar rally during the day, then more people will be emboldened to sell the dollar further because the current account deficit issue and the weaker dollar trend overshadow the growth story," he added.
Bob Lynch, senior currency strategist at BNP Paribas in New York, said the dollar's losses so far despite the robust economic growth figure was not a surprise given the fact that strong U.S. economic prospects have failed to give the greenback a lift in the past month. "I wouldn't read too much into the dollar's fall. The dollar derives limited benefit from strong data anyway as shown in the last month. The dollar had a strong rebound yesterday so if it falls below $1.1800 is not problematic at all," said Lynch. In early New York trade, the euro was up 0.2 percent against the dollar at $1.1800 . Gains in the single European currency kept it supported against the yen, rising to 129.73 yen , up 0.8 percent on the day. The dollar rose to 109.93 yen , defying the overall market trend, with some analysts partly attributing the advance to profit-taking on the Japanese currency amid extreme net long positions in the futures market. Against the Swiss franc, the dollar slipped 0.3 percent to 1.3166 francs . The pound, meanwhile, rose 0.1 percent to $1.6977 .
EU DECISION
A decision by European finance ministers effectively to suspend EU budget deficit rules had little direct impact on the euro, while an upbeat German business confidence survey was overshadowed by expectations of the now hefty upward revision to U.S. growth data. "The spotlight is really on the U.S. numbers," said Mark Henry, currency strategist at GNI in London. "Disagreement between European officials on the Stability Pact is not good for the euro although there was some initial relief that France and Germany would avoid being fined."
RECOVERY GATHERS PACE
Germany's influential Ifo institute said business confidence improved for a seventh consecutive month in November as a global economic recovery outweighed the impact of a stronger euro. Ifo's closely-watched west German business climate index climbed more than expected to 95.7, its highest level since January 2001. "Germany's Ifo index was a little better than expected but it is U.S., not euroland, data that is driving the market at the moment," said Lee Ferridge, head of global currency strategy at Rabobank. U.S. economic releases later in the day are also expected to reinforce recovery expectations. The Conference Board's monthly gauge of consumer confidence at 1500 GMT is expected to show its highest surge since September 2002.//www.reuters.com