Investing.com - The dollar extended the strong gains it posted against most major currencies earlier Thursday in wake of robust U.S. service-sector data coupled with a European Central Bank decision to loosen policy, which pummeled the euro.
In U.S. trading on Thursday, EUR/USD was down 1.58% at 1.2941, the first time below the 1.300 mark since 2013.
The U.S. services sector grew at its strongest pace in August since 2005.
The Institute for Supply Management reported earlier that its services index rose to 59.6 in August from 58.7 in July, far surpassing market forecasts for a downtick to 57.5.
A reading above 50 indicates expansion in the sector, and the index offset lackluster U.S. employment data.
The Labor Department reported that the number of individuals filing for first-time unemployment assistance in the U.S. last week rose by 4,000 to 302,000 from the previous week’s total of 298,000.
Analysts had expected jobless claims to rise by 2,000 to 300,000 last week.
Elsewhere, payroll processor ADP reported that its nonfarm payrolls report showed that the private sector added 204,000 jobs in August, missing expectations for jobs growth of 220,000.
At the same time data showed that the U.S. trade deficit narrowed to the lowest in six months in July.
The euro, meanwhile, came under pressures of its own.
The European Central Bank trimmed its benchmark interest rate to a record-low 0.05% from 0.15%, surprising many market analysts who had expected no change.
The central bank also lowered its deposit facility rate to -0.20% from -0.10% previously and its marginal lending rate to 0.30% from 0.40%.
The euro extended losses after ECB President Mario Draghi said the bank will begin an asset-backed securities purchasing program to shore up the recovery and steer the continent away from deflationary decline.
Draghi did not say how much debt the ECB planned to purchase, as further details will emerge in October.
The ECB cut its forecast for growth this year to 0.9% down from 1.0% previously and cut the forecast for 2015 to 1.6% from 1.7%. The bank also lowered its inflation forecast for this year to 0.6% from 0.7% in June.
The dollar was up against the yen, with USD/JPY up 0.44% at 105.24, and up against the Swiss franc, with USD/CHF up 1.60% at 0.9324.
The greenback was up against the pound, with GBP/USD down 0.74% at 1.6338.
In the U.K., the Bank of England voted to keep interest rates on hold at 0.5% and to keep the size of its asset purchase program unchanged at £375 billion.
The minutes of the meeting, due to be published in two weeks, would indicate how many monetary policy committee members voted in favor of a rate hike. The MPC was split last month, with two members voting in favor of a rate increase and two against.
The pound remained under pressure from concerns that support for Scottish independence is gaining momentum ahead of a referendum due to take place on Sept. 18.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.07% at 1.0880, AUD/USD up 0.11% at 0.9352 and NZD/USD down 0.29% at 0.8302.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.15% at 83.83.
On Friday, investors will shift their focus from Europe across the Atlantic to the U.S., which will release its August jobs report.