The dollar pared its decline against a basket of currencies early Thursday after a steeper-than-forecast drop in U.S. jobless claims supported the view of an improving labor market that would allow the Federal Reserve to raise interest rates.
The number of Americans filing for jobless benefits for the first time fell to 255,000 in the week ended July 18, the lowest level in more than 41-1/2 years, the U.S. Labor Department said.
The dollar index was last down 0.48 percent at 97.14 after touching a session low of 96.887 shortly before the release of the latest jobless claims data.
Earlier, the euro jumped above $1.10 for the first time in a week.
The New Zealand dollar was the biggest mover, jumping 1.5 percent after the country’s central bank disappointed those who had bet on a larger cut in interest rates and toned down its call for more falls for the kiwi.
After a dive lower in morning trade in Europe, the dollar was half a percent lower against the euro, having briefly pushed above $1.10. Sterling also fell against the euro after a surprisingly poor batch of UK retail sales numbers.