NEW YORK (Bloomberg) — The dollar weakened to $1.50 per euro for the first time in 14 months as more evidence of a recovery in the global economy from recession increased demand for higher-yielding assets.

The Canadian dollar fell against most of its major rivals this week after Bank of Canada Governor Mark Carney said last week that intervention to weaken the currency "is always an option". The US economy expanded in the third quarter for the first time since June 2008, a Commerce Department report will show next week, according to the median estimate of 65 economists in a Bloomberg survey.

"We've reached these milestones," said Andrew Chaveriat, a currency strategist at BNP Paribas Securities SA in New York. "The downtrend in the dollar is still there."

The dollar fell 0.7 percent last week to $1.5008 per euro, from $1.4905 on October 16. The US currency touched $1.50 on October 21 for the first time since August 2008. The yen declined 1.3 percent to 92.06 versus the dollar, from 90.89, in its biggest decline since August. Japan's currency depreciated two percent to 138.15 per euro, compared with 135.48 a week earlier.

The pound fell one percent this week to 92.02 pence per euro after the UK's economy unexpectedly contracted, fuelling speculation that the Bank of England will increase its £175 billion ($286 billion) programme to buy bonds.

The Office for National Statistics said yesterday that UK gross domestic product dropped for a sixth month, declining 0.4 percent in the third quarter from the second. Economists predicted a 0.2 percent increase in a Bloomberg News survey.

The UK central bank began buying government and company debt with newly printed money in March as it sought to hold down borrowing costs in an attempt to haul the economy out of deepest recession since World War II.

"The UK is showing it's a laggard compared to the rest of Europe," said Marc Chandler, global head of currency strategy in New York at Brown Brothers Harriman & Co. The Bank of England "might have to extend" asset purchasing, he said.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against the euro, yen, Swiss franc, pound, Swedish krona and Canadian dollar, touched 74.94 on October 21, the lowest level since August 2008, as optimism about the global recovery increased. Reports this week showed German business confidence rose to the highest level in 13 months and China's economy grew at 8.9 percent in the third quarter, the fastest pace in a year.

All but 20 of the 138 companies in the Standard & Poor's 500 Index that reported third-quarter results this week beat the average analyst estimate, including Apple Inc., Caterpillar Inc. and Morgan Stanley, according to data compiled by Bloomberg.

The greenback reached a two-and-a-half-year high against the euro on October 28, 2008, as investors sought the safety of US government debt after the September 15, 2008, bankruptcy of Lehman Brothers Holdings Inc. froze credit markets.

The dollar has plunged 18 percent from that level as efforts by global central banks restored liquidity and signs of economic recovery encouraged investors to buy higher-yielding assets at the expense of the greenback. The Federal Reserve's benchmark interest rate is near zero, compared with 3.25 percent in Australia and 2.5 percent in New Zealand.