Investing.com - The dollar shot up against the yen on Thursday after upbeat U.S. jobless claims data and solid earnings enticed investors out of safe-haven yen positions.
The yen has recently served as a safe-harbor asset class during times of economic and geopolitical uncertainty due to concerns that a cooling global economy may weigh on U.S. recovery and affect the timing of U.S. rate hikes next year.
In U.S. trading, USD/JPY was up 0.95% at 108.17, up from a session low of 107.11 and off a high of 108.22.
The pair was expected to test support at 106.22, Monday's low, and resistance at 109.87, the high from Oct. 6.
The Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Oct. 18 increased by 17,000 to 283,000, broadly in line with forecasts.
The four-week average fell to 281,000, the lowest since May 2000, while continuing claims, which includes those receiving benefits for at least a second month in a row, also hit a 14-year low, of 2.35 million, which bolstered the U.S. currency against the safe-haven yen.
Better-than-expected earnings from General Motors Company (NYSE:GM) as well as Caterpillar Inc (NYSE:CAT), the latter of which hiked its profit outlook, boosted dollar demand by reminding investors that despite hiccups here and there, the U.S. economy continues to recover and will likely warrant rate hikes next year.
Meanwhile in Europe, better-than-expected output figures gave the euro support, which further chipped away at the yen's recent gains.
Research group Markit Economics reported earlier that its preliminary manufacturing purchasing managers’ index for the euro area ticked up to 50.7 this month from a final reading of 50.3 in September. Analysts had expected the index to slide to 49.9.
The service-sector PMI held steady at 52.4, slightly above expectations of 52.0.
Separately, the yen was down against the euro and up against the pound, with EUR/JPY up 1.01% at 136.90, and GBP/JPY trading up 0.95% at 173.61.
On Friday, the U.S. is to round up the week with a report on new home sales.