The US dollar fell as the negative economic data spurred talks that the US Federal Reserve will lag behind the European Central Bank in increasing interest rates.

The preliminary report showed that the US gross domestic product grew 1.8 percent in the first quarter of 2011, following the 3.1 percent growth in the fourth quarter of 2010. Market participants anticipated an increase by 2.2 percent. The claims for unemployment benefits rose from 414,000 to 424,000 last week. That’s compared to the median forecast of 403,000.

Mary Nicola, a currency strategist at BNP Paribas, said:

With data coming out weaker, it negates what a lot of the Fed’s more hawkish members have been saying and solidifies the talk of the dovish camp of the Fed. Yields have come off significantly, and that’s having an impact on dollar-yen.

EUR/USD traded at 1.4130 as of 00:35 GMT today after it gained 0.4 percent to 1.4144 from 1.4086 yesterday. USD/JPY traded near 81.22, following the drop by 0.8 percent to 81.27 from 81.96.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.