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Dollar trounced on GDP, view of easy Fed

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

The dollar nosedived, stocks floundered and bonds sold off Wednesday as traders awaited the Fed's take on the surprise weakness in first-quarter growth.

The dollar index tumbled more than 1 percent after the government said first-quarter growth was just 0.2 percent, fanning expectations for a dovish Fed, when it releases its post-meeting statement at 2 p.m. EDT. GDP was expected to grow at 1 percent, and economists still expect a bounce back in the second and third quarter.

The Dow seesawed in negative territory, while European stocks were whipped as the euro rallied hard, breaking out to a new recent high of 1.11. Traders said higher U.S. bond yields were not reflecting the GDP number as much as the fact that European yields moved higher, and the German bund yield rose dramatically. It gained 10 basis points to about 0.26 percent. The U.S. 10-year bond was at 2.05 percent.

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