Investing.com - The dollar extended losses against the euro on Thursday following the release of stronger than forecast euro zone private sector data, while the Swiss franc strengthened after the government moved to curb mortgage lending.
The euro rallied against the dollar after data showed that private sector activity in the euro zone got off to a strong start in 2014, as growth picked up in Germany, while the rate of the downturn in France eased.
EUR/USD hit 1.3685, the highest since January 14 and was last up 0.95% to 1.3675.
The euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, fuelling hopes that the European Central Bank will not need to ease monetary policy further in order to shore up the recovery.
Manufacturing activity in Germany expanded at the fastest pace since May 2011 this month.
USD/JPY fell to lows of 103.49, and was last down 0.76% to 103.72.
In the U.S., data on Thursday showed that initial jobless claims rose in line with expectations last week, but the number of continuing jobless claims remained above the three million mark for the second successive week.
The number of people who filed for unemployment assistance in the U.S. last week rose to 326,000, the Labor Department said, up from the previous week’s revised total of 325,000.
The number of people filing continuing unemployment claims rose to 3.056 million up from 3.022 million in the week to January 11. Analysts had expected continuing claims to fall to 2.930 million.
Another report showed that U.S. factory output fell to a three-month low in January, due to disruption from unseasonable cold weather.
The U.S. manufacturing PMI declined to 53.7 this month from a final reading of 55.0 in December. Analysts had expected the index to hold steady.
Also Thursday, a report showed that U.S. existing home sales increased 1% to 4.87 million units last month from 4.82 million in November, undershooting expectations for an increase to 4.94 million.
The dollar was sharply lower against the Swiss franc, with USD/CHF down 1.27% to 0.8999. The franc gained ground after the Swiss government said Thursday it agreed to the Swiss National Bank’s request to raise the level of capital banks must hold to underpin mortgage lending, in order to curb the country’s booming housing market.
GBP/USD hit 1.6636, the highest since May 2011 and was last up 0.24% to 1.6613. Demand for sterling continued to be underpinned after a sharp fall in the U.K. unemployment rate heightened expectations that the Bank of England may raise interest rates sooner than anticipated.
The Australian dollar was trading close to three-and-a-half year lows, with AUD/USD down 0.85% to 0.8776. The Aussie slumped after the preliminary reading of China’s HSBC manufacturing index fell to a six-month low of 49.6 in January from 50.5 in the previous month. Analysts had expected the index to tick up to 50.6.
Meanwhile, NZD/USD edged up 0.12% to 0.8318.
The Canadian dollar remained close to four-and-a-half year lows against the U.S. dollar as expectations for a rate cut by the Bank of Canada continued to weigh, with USD/CAD up 0.39% to 1.1129, after falling to lows of 1.1083 earlier.
The Canadian dollar initially moved higher following the release of better-than-expected Canadian retail sales data for November. Statistics Canada said retail sales rose 0.6% in November, surpassing expectations for a 0.3% increase, recovering from a 0.1% decline in October.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.76% to an eight-day low of 80.70.