NEW YORK (MarketWatch) -- The dollar headed lower versus the euro but remained up against the Japanese yen in volatile trading on Thursday after a mixed bag of U.S. economic data.
The U.S. currency had been lower in European and Asian trading, a day after the Dow Jones Industrial Average pushed back above the 10,000 level for the first time in a year. After a weak regional manufacturing report, stocks remained lower and U.S. Treasurys briefly turned positive, pushing yields down, indicating a demand for safer assets that briefly supported the greenback.
"Through the noise, there is a strong propensity to sell the dollar," said Richard Franulovich, senior currency strategist at Westpac in New York.
The dollar index (DXY 75.40, -0.15, -0.20%) , a measure of the greenback against a trade-weighted basket of currencies, traded at 75.334, compared to 75.513 Wednesday. It rose as high as 75.765 earlier.
The dollar index hit a 14-month low on Wednesday and has fallen by around 15% from its 2009 peak as investor's willingness to hold more risky assets have prompted world equities to rally since March. That's also pushed the euro toward the psychologically important $1.50 mark versus the U.S. dollar.
The euro bought $1.4954, up from $1.4915 in North American trade late Wednesday. In earlier trading, the dollar gained to have the euro buy as little as $1.4862.
The dollar bought 90.42 Japanese yen, up 1.2% from 89.47 yen on Wednesday.
The U.S. dollar bought 1.0291 Canadian dollars, up from C$1.0277 late Wednesday.
Rising equities have spelled weakness for the U.S. dollar as investors abandon the former safe haven for riskier assets.
Benchmark U.S. stock indexes declined with the Dow (INDU 10,008, -8.16, -0.08%) falling just 0.1%, paring an earlier decline, after reaching 10,000 on Wednesday for the first time in a year.
"Following Wednesday's sharp gains on Wall Street, the equity market may take some profits today, in spite of the better economic data," said analysts at Action Economics. "Equities remain within reach of positive territory, and overall, the greenback looks to stay under some pressure."
The dollar index began heading lower following a report that showed manufacturing activity in the Philadelphia Federal Reserve's region expanded at a weaker-than expected pace in October. The Philly Fed index declined to 11.5 this month from 14.1 in September.
The report briefly boosted Treasury bonds, sending U.S. yields lower and reducing the appeal of investing in dollar assets, Franulovich said. See Bond Report.
"We're seeing more signs that currencies becoming responsive to yields," he said. "Bond yields have been gently drifting lower for several months and that's been the dollar's problem."
Still, any small increase in yields in coming months, expected as the economy recovers, won't help the dollar because the Federal Reserve has said it will keep interest rates for an extended time, Franulovich said.
