The dollar rose broadly on Thursday as most investors bet the greenback's recent sharp slide against major currencies had gone too far, too fast. Since April, the dollar has lost around 12 percent against six major currencies, with heavy selling in recent weeks pushing it to the lowest in more than a year. But on Thursday, the dollar index gained 0.1 percent to 75.071.
The dollar hit a one-month peak at 91.70 yen while commodity-linked currencies such as the Australian dollar retreated from a near 15-month high. Investors began to question how much further the dollar could slide, and how many other assets could rally, sending funds out of riskier currencies that have gained on signs of economic recovery.
"We've seen a big move across a host of assets lately and a lot of people are looking for when we're going to top out, so there's some profit-taking today," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.
Worse-than-expected US jobless claims data on Thursday offset generally positive US earnings and rekindled doubts about the strength of the United States' economic rebound. With US unemployment near 10 percent, investors expect interest rates to remain at record lows well into 2010 even if signs of stronger world growth prompt other central banks to raise rates and begin winding down some emergency spending.
Low rates make the dollar less attractive than higher-yield currencies more closely correlated with economic recovery. At the same time, economic jitters boost the dollar's safety appeal. The dollar was up 0.3 percent to 91.27 yen at current prices. Against the Canadian dollar, the greenback rose 0.5 percent to C$1.0474. Earlier it rose to C$1.0544 but eased back after the Bank of Canada's quarterly monetary policy report suggested officials think the economy can cope with a stronger currency.
The Bank of Canada left interest rates at record lows this week and dashed expectations of a hike before mid-2010. The Australian dollar was last little changed at $0.9270, after going as low as $0.9186. The dollar did lose some of its gains as the New York session began to wind down. Analysts said there was no specific news but investors were beginning to rebalance positions after the day's trading.
The euro rose on the session and was last up 0.1 percent at $1.5028 after hitting a 14-month peak of $1.5046 Wednesday. It had traded as low as $1.4944 on Thursday. Sterling was last up 0.1 percent at $1.6617, near a one-month high and shrugging off early sluggishness after data showing UK retail sales were flat in September.