July 26 (Bloomberg) -- The dollar fell against its major counterparts as President Barack Obama said the U.S. may experience a “deep economic crisis” if leaders fail to reach a compromise on spending cuts and the nation defaults. The U.S. currency slid below 78 yen for the first time since March and fell to the weakest ever versus the Swiss franc as lawmakers struggled to reach an accord to raise the nation’s $14.3 trillion debt ceiling by an Aug. 2 deadline. The pound rallied from a two-week low against the euro after the U.K. economy expanded for a second quarter. Sweden’s krona climbed as a report showed producer prices increased. China’s yuan advanced to its strongest level in 17 years against the greenback. “The uncertainty is a clear negative for the dollar across the board,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Until we have more news, I can’t see sentiment changing.” The dollar depreciated 0.3 percent to 78.06 yen at 7:02 a.m. in New York, after declining to 77.90, the weakest level since March 17. The greenback was down 0.5 percent to 80.23 Swiss centimes and earlier slid to an all-time low of 79.98 centimes. It weakened 0.7 percent to $1.4478 per euro after reaching $1.4522, the weakest since July 5. Obama blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. “If we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy,” Obama said in a prime-time address from the White House. ‘Serious Damage’ The Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners, fell to 73.6659 from 74.064. It earlier reached 73.526, the lowest since June 7. “Just like a meltdown at a nuclear power plant, a U.S. default will trigger an incident that’s too scary to imagine, so people can’t buy the dollar when there’s such a risk, however small,” said Daisaku Ueno, Tokyo-based president of Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency broker. “Currencies such as the Swiss franc or Japanese yen continue to be preferred.” Moody’s Investors Service cut Greece to its second-lowest rating yesterday. The European Union support package for Greece allows an “orderly default” and buys time, Moody’s said. The pound jumped 0.7 percent to $1.6398 after British economic-growth data was released. Sterling erased a drop versus the 17-nation euro, trading little changed at 88.25 pence. It earlier reached 88.84 pence, the weakest level since July 11. ‘Flicker of Hope’ The British economy expanded by 0.2 percent in the second quarter, down from 0.5 percent in the first three months of the year, the Office for National Statistics said in London today. GDP would have grown by 0.7 percent without special factors such as Japan’s earthquake, an extra holiday for the royal wedding, and unusually warm weather in April, the statistics office said. “The market was positioned for a weak number, so this flicker of hope that the U.K. isn’t about to fall back into recession helped boost sentiment to sterling,” Kathleen Brooks, London-based research director at Forex.com, a unit of online currency trading company Gain Capital Holdings Inc., wrote in a client note today.

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