NEW YORK (Bloomberg) — The dollar fell versus the euro and the Canadian currency after a report showed purchases of existing homes in the US declined during April to the lowest level in almost four years.The US dollar weakened compared with 13 of the 16 most-active currencies tracked by Bloomberg, outperforming only the yen, British pound and Australian dollar. The annual home sales rate was less than 6 million for the first time since June 2003. The yen fell the most in two weeks versus the euro after North Korea test-fired missiles and Japan threatened sanctions.

"The data definitely puts some pressure on the dollar as it shows a slowdown in the housing sector," said Boris Schlossberg, senior currency strategist at DailyFX.com in New York. "It gives credence to dollar bears."

The dollar traded at $1.3447 per euro at 3.53 p.m. on Friday in New York, from $1.3429 the day before. The dollar bought 121.75 yen, from 121.40. Europe's currency traded at 163.71 yen, from 163.02 yesterday. It reached an all-time high of 164.02 on May 23.

The euro declined 0.5 percent against the dollar this week. The yen also lost 0.5 percent against the US currency.

Sales decreased 2.6 percent to an annual pace of 5.99 million last month, from a revised 6.15 million rate in March, according to the National Association of Realtors. Economists surveyed by Bloomberg News had forecast a rate of 6.12 million.

"The numbers are a reminder for the market not to jump to conclusions about a bottoming out in the housing market," said Ashraf Laidi, chief FX analyst at CMC Markets in New York. "It shows we still have some good gains to see from the euro. For the dollar, it's a prelude for further weakness."

Laidi estimates the euro will gain to $1.37 before October.

Yesterday a report from the Commerce Department showed sales of new homes rose 16.2 percent, the most in 14 years, to an annual pace of 981,000 last month, from a revised 844,000 rate in March. Economists surveyed by Bloomberg News had forecast a gain of 0.2 percent to 860,000. The median price of a home dropped 10.9 percent.

The yield advantage of a 10-year Treasury note compared with a comparable-maturity German bund is 47 basis points. The spread was 40 basis points on May 15. A wider spread increases the allure of the US asset.

Traders cut bets this week the Federal Reserve will reduce its benchmark 5.25 percent interest rate this year. The yield on the fed funds futures contract for October is 5.21 percent. It was 5.19 percent a week ago.

The yen weakened against all 16 most-actively traded currencies tracked by Bloomberg after North Korea test-fired missiles as part of routine annual exercises, South Korea's military said in a statement. Japanese Prime Minister Shinzo Abe threatened sanctions against the communist nation.

Volatility on one-month euro-yen options, a gauge of the risk of currency trades, increased to 7.05 percent, the highest in more than two weeks.

"The yen weakens as geopolitical risks are rising," said Christian Dupont, a senior currency trader at Societe Generale SA in Montreal. "This is the reason to push people to sell the yen."

The weak Chinese yuan isn't to blame for the US trade deficit, said China's Vice-Premier Wu Yi at a dinner in Washington last week, signalling the nation won't give in to pressure for faster gains. Two days of talks with US officials ended yesterday and didn't produce agreements on the currency.

The yuan was little changed at 7.6523 to the dollar. It has gained about 8 percent since it was allowed to trade in a band during July 2005. The band was widened last week to 0.5 percent on either side of a fixed rate against the dollar set by the central bank.