Investing.com - The dollar rallied against the yen on Thursday, rising above the 108 level, and the euro erased gains against the greenback as U.S. labor market data and upbeat corporate earnings bolstered dollar demand.
USD/JPY was up 0.91% to 108.11, not far from session highs of 108.18.
The dollar was boosted after a report showed that U.S. initial jobless claims rose last week, but the underlying trend indicated improving labor market conditions.
The Department of Labor said the number of Americans filing for initial jobless benefits in the week ending October 18 increased by 17,000 to a seasonally adjusted 283,000, broadly in line with forecasts.
However, the four-week average fell to 281,000, the lowest since May 2000, while continuing claims, which counts people receiving benefit for at least the second month in a row, also hit a 14-year low, of 2.35 million.
Market sentiment was also boosted as upbeat corporate earnings reports sent Wall Street higher at the open and soothed investor jitters over slowing global economic growth.
Fears that a slowdown in global growth could act as a drag on the U.S. economy have prompted investors to reassess expectations on how soon the Federal Reserve will raise interest rates after its stimulus program winds up later this month.
EUR/USD was flat at 1.2648, having retreated from session highs of 1.2676.
The single currency found support after data earlier Thursday showed that the euro zone saw a marginal uptick in business activity in October.
Research group Markit said its preliminary euro zone manufacturing purchasing managers’ index ticked up to 50.7 this month from a final reading of 50.3 in September. Analysts had expected the index to slide to 49.9.
The region’s services PMI held steady at 52.4, slightly above expectations of 52.0.
Germany’s manufacturing PMI rebounded to 51.8 from 49.9 in September, showing a return to growth.
Elsewhere, the dollar was higher against the pound, with GBP/USD down 0.14% to 1.6027, while USD/CHF was steady at 0.9539.
Sterling slid earlier in the session after official data showed that retail sales in the U.K. posted a larger than expected decline in September, adding to signs that the rate of the economic recovery is cooling.
The New Zealand dollar was sharply lower, with NZD/USD down 1.24% to 0.7831 after data showed that the country’s consumer price index rose just 0.3% in the third quarter, falling short of expectations for a 0.5% gain.
The soft data fuelled speculation that the Reserve Bank could delay any potential rate hikes.
Meanwhile, AUD/USD slid 0.18% to 0.8760, while USD/CAD eased up 0.11% to 1.1247.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.12% to 85.97, the most since October 15.