Investing.com - The dollar backed off two-and-a-half year lows against the euro on Thursday and fell to fresh one-week lows against the yen as concerns over a slowdown in China and the ongoing crisis in Ukraine supported safe haven demand.
EUR/USD was up 0.22% to 1.3934 after rising as high as 1.3966 earlier, the strongest level since October 31, 2011.
The euro was boosted by expectations that the European Central Bank will refrain from further easing, after the bank left monetary policy unchanged last week, despite forecasting low inflation for some years to come.
The euro’s gains were offset following the release of stronger-than-expected data on U.S. retail sales and initial jobless claims.
The Commerce Department reported that U.S. retail sales rose 0.3% in February, ending two months of declines. Market expectations had been for an increase of 0.2%.
Core retail sales, which exclude automobile sales, also rose 0.2% last month, ahead of expectations for a 0.3% rise.
Separately, the Department of Labor said the number of people filing new claims for unemployment benefits in the U.S. fell by 9,000 to a three month low of 315,000 last week, from the previous week’s revised total of 324,000.
Analysts had expected initial jobless claims to rise by 6,000 last week.
Elsewhere, USD/JPY hit lows of 102.29 and was last down 0.40% to 102.33.
Demand for the safe haven yen continued to be underpinned after weaker-than-expected data from China pointed to a slowdown in the world’s second-largest economy at the start of the year.
Chinese industrial production rose 8.6% in the first two months of 2014, according to data released on Thursday, missing market expectations for an increase of 9.5%, while Chinese retail sales rose by a smaller than forecast 11.8% in the same period.
Investors also remained wary as tensions between Russia and the West remained high ahead of Sunday's referendum in Ukraine’s Crimea region, now controlled by pro-Russian forces, on whether citizens want to join Russia.
USD/CHF was down 0.24% to 0.8718, after slumping to two-and-a-half year lows of 0.8699 earlier in the session.
Elsewhere, the dollar was lower against the pound, with GBP/USD rising 0.39% to 1.6684.
The New Zealand dollar rallied to 11-month highs, with NZD/USD advancing 0.76% to 0.8588. The kiwi was boosted after the Reserve Bank raised its benchmark interest rate to 2.75% from a record low 2.5% on Thursday.
The central bank also raised its growth forecast to 3.3% in the year ending March 31, faster than the 2.7% pace projected in December.
Meanwhile, AUD/USD jumped 1.11% to 0.9089 after the statistics bureau reported that the economy added 47,300 jobs in February, well above forecasts for jobs growth of 18,000. The nation’s unemployment rate remained unchanged at 6.0%.
The U.S. dollar was also weaker against the Canadian dollar, with USD/CAD down 0.54% to 1.1059.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.27% to 79.48.