Dollar pushes higher vs. euro, steady at 2-1/2 year highs vs. yen

Investing.com - The dollar was steady close to two-and-a-half year highs against the yen on Thursday and pulled back from 14-month highs against the euro weak German economic data and an unexpected contraction in the U.S. economy in the fourth quarter supported safe haven demand.

During European late morning trade, the dollar was little changed close to its highest levels since mid-June 2010 against the yen, with USD/JPY dipping 0.05% to 91.03.

Data on Wednesday showed that the U.S. economy contracted 0.1% in the fourth quarter, confounding expectations for growth of 1.1% and a sharp slowdown from growth of 3.1% in the preceding quarter.

Also Wednesday, the Federal Reserve reaffirmed its commitment to maintaining its easing program at the outcome of its latest policy meeting.

The yen remained broadly weaker amid expectations that Japanese Prime Minister Shinzo Abe would keep up pressure on the Bank of Japan to implement more aggressive easing measures to combat deflation.

The greenback pulled away from 14-month lows against the euro, with EUR/USD slipping 0.17% to 1.3542.

Sentiment on the single currency was dented by data showing that German retail sales fell 1.7% in December, the sharpest drop in more than three years.

Elsewhere, Germany’s largest bank Deutsche Bank posted a surprise net loss of EUR2.2 billion for the fourth quarter.

This was offset by a report showing that the number of unemployed people in Germany fell by 16,000 in January, double expectations for a decline of 8,000 bringing the unemployment rate down to 6.8% from 6.9% in December.

The greenback pushed higher against the pound and the Swiss franc, with GBP/USD sliding 0.11% to 1.5782 and USD/CHF inching up 0.08% to 0.9116.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.14% to 1.0027, AUD/USD unchanged at 1.0414 and NZD/USD up 0.16% to 0.8372.

The New Zealand dollar remained supported after the Reserve Bank of New Zealand kept interest rates on hold at 2.5% on Thursday and said it expected economic growth to strengthen over the next year.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.12% to 79.40.

The U.S. was to release the weekly government report on initial jobless claims later in the trading day.