The dollar fell against the yen to a session low Thursday after data showed initial U.S. weekly jobless claims unexpectedly rose last week.
The dollar [JPY=X 90.58 -0.39 (-0.43%) ] dropped as low as 90.48 yen after the data from around 90.65 yen prior to the release of the data.
The U.S. Labor department reported that initial state jobless benefit claims rose to 480,000 in the latest week. Markets were expecting claims of 460,000.
The euro hit a seven-month low against the dollar, knocked by concerns over the fiscal health of some euro zone countries and ahead of a news conference by European Central Bank President Jean-Claude Trichet.
Any comments on the high indebtedness of countries such as Greece and Portugal are likely to be the focus for markets when Trichet speaks at 1:30 pm London time after the ECB, as expected, left interest rates at 1 percent.
Worries over Spain and Portugal have increased as investors speculate the two countries may face similar problems over budget deficits and debt as Greece.
These concerns helped lift the safe-haven dollar to a six-month high versus a currency basket.
"The euro remains vulnerable and the market has now turned its attention to Spain and Portugal. Rallies have been short-lived and I am targeting a move towards $1.3745 in the short term," said BNP currency strategist Ian Stannard.
Sterling trimmed losses against the dollar, however, after the Bank of England announced a pause in asset purchases under quantitative easing, as expected. It left the door open to more purchases should the outlook warrant it.
The euro [EUR=X 1.3824 -0.0064 (-0.46%) ] was trading against the dollar, close to an earlier low of $1.3827, its weakest since June 2009.
Weakness was partly attributed to widening in Greek, Portuguese and Spanish bond yield spreads over German benchmarks.
"Euro/dollar continues to trade off euro zone CDS/bond spreads and looks vulnerable," said ING currency strategist Chris Turner in a note.
Traders said moves in the euro could become volatile should Trichet make any strong reference to fiscal problems in the euro zone.
Sterling [GBP=X 1.5837 -0.0045 (-0.28%) ] was down against the dollar on the day but above an earlier three-and-a-half month low of $1.5806 reached in the run-up to the BoE decision.
Strong US Data
Traders sold the single European currency on the view that dismal public finances in euro zone countries may hinder any economic improvements in the region, increasing the probability that the U.S. economy will recover more quickly.
Strong U.S. data this week supported this view ahead of key non-farm payrolls numbers due on Friday.
The dollar hit a six-month high of 79.715 versus a basket of currencies, trading well above its 200-day moving average.
Technical traders said the next resistance was at 80.07, which would be a 38.2 percent Fibonacci retracement of its fall from 89.624 to 74.17 in 2009.
The New Zealand dollar [NZD=X 0.6948 -0.0067 (-0.96%) ] hit a five-month low of $0.6937 after data showed the country's jobless rate hit a 10-year high while weak Australian retail sales data pushed the Aussie to a six-week low $0.8772.
Risk-averse traders flocked to the yen as European shares fell 0.8 percent.
The euro fell against the yen [EURJPY=X 125.23 -1.11 (-0.88%) ].
http://www.cnbc.com/id/35226910
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