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The dollar swerved back and forth versus other majors on Thursday, gaining versus the euro despite another dismal reading on the US jobs market.
First time claims for unemployment benefits showed another unexpected increase in the week ended August 14th, according to a report released by the Labor Department on Thursday.
The report showed that initial jobless claims rose to 500,000 from the previous week's revised figure of 488,000.
Today's discouraging jobs data did nothing to alleviate fears of a double-dip recession.
The markets have came to expect softness in the nation's jobs market, but with half a million Americans filing for unemployment benefits for the first time, the situation appears to have deteriorated again of late.
St. Louis Federal Reserve President James Bullard, who last week warned against the possibility of Japanese-style deflation, said Thursday that core inflation remains at low but manageable levels.
Speaking in Arkansas, Bullard noted that current conditions do not justify quantitative easing, and that the Fed should move in a disciplined, pragmatic way if required to further support the economy.
The buck fell sharply in late morning dealing versus the yen, testing a recent 15-year low o f Y84.71 before finding support.
On the flip side, the dollar rose sharply against its Canadian counterpart around mid-day, rebounding to C$1.0400.
The buck extended its run of choppy trading versus the euro, bouncing back and forth between $1.28 and $1.2900 on Thursday.
Following a robust second quarter, the German central bank lifted its 2010 forecast to 3% growth, up from its previous calendar-adjusted forecast of expansion of 1.9%.
"The outlook for the current year remains favorable, even if there are signs for a slowing of global production activity and trade," the report said. "The overall trend of the German economy is positive and the upswing ought to continue."
Encouraging news on Greece also gave the euro a measure of support, offsetting risk aversion as US stocks tumble.
Greece is meeting its commitment to austerity and making structural reforms, putting the country in position to secure another loan installment, the European Commission said.
Deficit cuts "are going even faster than planned," commission spokesman Amadeu Altafaj told reporters in Brussels today.
Versus the sterling, the dollar improved a penny from its early lows to trade at 1.5580 during the afternoon.
U.K.'s seasonally adjusted retail sales volume including automotive fuel rose 1.1% month-on-month in July, following the 0.7% rise in June, the Office for National Statistics said Thursday. Economists had forecast a 0.3% increase.
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