Forex - U.S. dollar drops on improved risk sentiment

Investing.com - The U.S. dollar traded lower against its global counterparts Thursday, as risk sentiment improved following the release of better than expected U.S. data, but uncertainty over a second bailout deal for Greece continued to cloud the outlook for riskier assets.

During U.S. afternoon trade, the dollar was higher against the euro, with EUR/USD gaining 0.29% to hit 1.3105.

Risk sentiment improved after data indicated that U.S. initial jobless claims unexpectedly fell to their lowest level since March 2008 last week, declining to 348,000, missing expectations for an increase to 364,000.

An index of manufacturing activity in the Philadelphia area rose more-than-expected in February, advancing to 10.2, above expectations for a rise to 9.0.

In a separate report, the U.S. Census Bureau said the number of building permits issued in January rose 0.7% to a seasonally adjusted 0.68 million, broadly in line with market expectations.

However, fears regarding a delay on a second bailout for Greece persisted after a teleconference of euro zone finance ministers on Wednesday failed to reach a decision about the issue.

European Union officials are believed to be considering delaying all or part of Greece's bailout until after a general election in the country, which is expected to take place in April. 

The greenback found support after ratings agency Moody's warned that it may cut the credit ratings of 114 banks in 16 countries across Europe, citing banks' vulnerability to the sovereign debt crisis in the euro zone.

The greenback was lower against the pound, with GBP/USD advancing 0.59% to hit 1.5786.

Pound sentiment increased after the Bank of England’s quarterly inflation report Tuesday revised higher the bank’s two year inflation forecast, lowering expectations for more quantitative easing measures.

Earlier Thursday, a report by lender Nationwide showed British consumer confidence climbed to its highest level in five months in January as people's view of the outlook six months ahead grew more upbeat.

The greenback was higher against yen but lower against the Swiss franc, with USD/JPY adding 0.62% to hit 78.92 and USD/CHF down 0.25%, to hit 0.9213.

Elsewhere, the greenback was lower against its Canadian and Australian cousins but was flat against its New Zealand counterpart, with USD/CAD slipping 0.33% to hit 0.9967, AUD/USD adding 0.55% to hit 1.0754 and NZD/USD flat at 0.8330.

Earlier in the session, official data showed that the Australian economy added 46,300 jobs in January, beating expectations for a 10,500 gain, bringing the unemployment rate down to 5.1%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.18% to hit 79.60.

In addition Thursday, official data showed that U.S. core producer price inflation rose more-than-expected in January, rising by 0.4%, while PPI rose by 0.1%, slightly below expectations for a 0.3% gain.