RTTNews - The dollar remained on the defensive versus other majors Friday morning in New York, extending this week's brutal losses amid speculation that the global economy is on the mend.

With traders convinced they are seeing green shoots despite a run of sobering economic data from the world's biggest economy, the dollar has dropped to multi-month lows against a number of key counterparts.

Friday will be a quiet day on the economic front. There are no major releases from the US ahead of Monday's Memorial Day holiday.

Earlier this week, the minutes of the last FOMC policy-making meeting revealed that Fed governors foresaw a deeper recession than initially projected.

Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time, the statement read.

Still, there was no relief for the dollar, which has been the safe haven for traders during the heart of the recession, but has fallen out of favor with traders now looking for riskier plays. Higher yielders such as the euro have soared, the sterling has surged higher on the belief its big losses earlier in the year were overdone, and commodities-linked currencies have risen along with oil and metals prices.

The buck dropped to a nearly 5-month low of 1.3981 versus the euro, having fallen around 10 cents in the past month.

Against the sterling, the dollar dropped to a 6-month low of 1.5896, extending a move away from a 23-year high of 1.3501, set back in January.

Friday, official data confirmed the worst contraction in the U.K. economy since the early days of the Margaret Thatcher government in 1979.

The economy shrank 1.9% in the first quarter compared with the previous quarter, unrevised from previous estimate released on April 24, the Office for National Statistics reported. This was the largest decline since the third quarter of 1979.

The dollar fell to a 2-month low against the yen, slipping to 94. With the loss, the dollar inched closer to a 13-year low of 87.08, hit in January.

Friday, the Bank of Japan upwardly revised its economic view for the first time since July 2006. The central bank also decided to leave the key interest rate unchanged and expanded the range of eligible collateral to ensure financial market stability.

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