June 9 (Bloomberg) -- The dollar fell against the euro for the first time in three days as speculation the global recession may be ending damped demand for the U.S. currency as a refuge. The pound advanced as the U.K.’s political turmoil eased and a report showed house prices showed signs of stabilizing last month. Goldman Sachs Group Inc. recommended that its clients buy the euro versus the dollar, citing a recovery in global growth expectations and a “broader pickup” in demand for higher-yielding assets. “It’s still a risk-positive story,” said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. “We haven’t seen the top-off of the risky currencies. As long as you have positive surprises in economic readings, assets go up and confidence goes up. It creates a positive feedback.” The dollar declined 0.8 percent to $1.4009 against the euro at 9:29 a.m. in New York, from $1.39 yesterday. The yen traded at 136.76 versus the euro, compared with 136.89. The dollar decreased 0.9 percent to 97.62 yen from 98.49. The 16-nation euro will rise to $1.45, said Goldman Sachs in a research note today, saying the Federal Reserve will refrain from raising the target lending rate “for a considerable period of time” in response to a slow recovery. “The timing is now opportune,” Goldman Sachs wrote. “We think the level of growth will remain below trend, and U.S. rates will be kept low for a considerable period of time.” The dollar rose the most against the euro in five weeks on June 5 after the Labor Department reported that U.S. job cuts slowed to 345,000 in May, the lowest level in eight months. U.S. Jobs Report The jobs report raised speculation that the Fed will boost the target rate for overnight lending between banks to at least 0.5 percent by the end of the year. Fed funds futures contracts show a 45 percent chance of a rate increase by November, compared with 27 percent odds a week ago. Policy makers will keep the target rate in a range of zero to 0.25 percent this year, according to a Bloomberg News survey of 15 of the 16 primary dealers of U.S. government securities that trade with the central bank. A majority predict no increase until at least the second half of 2010. The pound advanced against the dollar for a second day, increasing 1 percent to $1.6217 after the Royal Institution of Chartered Surveyors said number of respondents in a monthly survey saying home values fell exceeded those reporting gains by 44.1 percentage points, the best reading since November 2007. Sterling also appreciated on speculation Prime Minister Gordon Brown fended off calls to step down following a series of ministerial resignations and a drubbing in local and European Union elections. Weaker Won The won dropped for a second day versus the dollar after Yonhap News cited a defense official as saying South Korea increased the number of ships it deployed near the North. The South Korean currency declined 1 percent to 1,264.85 per dollar, extending its losses in the past month to 1.4 percent. The dollar may strengthen before finance ministers from the Group of Eight industrialized nations meet this week in Italy, RBC Capital Markets said. “The looming G-8 meeting this weekend is no doubt cause for some squaring of dollar shorts to protect against any comments from the sidelines to the effect that the dollar’s decline has been unreasonably rapid in recent weeks,” Sue Trinh, a senior currency strategist at RBC in Sydney, wrote today. A short is a bet a currency will decline. The greenback decreased 6.6 percent against the euro in May, the biggest monthly drop this year, on concern a quadrupling of the U.S. budget deficit will undermine demand for dollar-denominated assets.

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