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Dollar falls as Middle East fears trump US GDP data

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The U.S. dollar edged down on Tuesday as investors piled into safe-haven currencies on concerns about rising tension between Russia and Turkey, shrugging off positive data on the U.S. economy.

The U.S. gross domestic product grew 2.1 percent in the third quarter, a healthier clip than initially thought, the government said.

The upward revision for GDP, one of the most important indicators of growth, could give the U.S. Federal Reserve the confidence to raise interest rates next month.

However, investors continued to favor the yen and Swiss franc, as they seemed more concerned with events in the Middle East where a Russian plane was shot down by Turkish forces near the Syrian border.


"That's the thing with backward-facing data. It's encouraging to see the improvement or the upgrade in growth, but it's still a stale piece of data," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "We're talking about the third quarter, more of a rear-view mirror, so the markets are more concerned about (the fourth quarter) and looking forward."

In addition to the GDP revision, the U.S. housing sector showed further strength in the third quarter as U.S. single-family home prices rose in September at a faster pace than in August and above market expectations.

The euro added 0.12 percent against the greenback to $1.0649. The dollar hit a session low against the Japanese yen after the GDP release, falling to 122.47 yen, and was last off 0.36 percent. The dollar also hit session low versus the Swiss franc ahead of the GDP report's release, last down 0.21 percent to 1.0160 francs per dollar.

The dollar index, which measures the dollar against six major world currencies, fell 0.21 percent to 99.60. It touched a new eight-month high on Monday.