By Ye Xie and Matt Townsend Sept. 17 (Bloomberg) -- The dollar dropped to within a penny of the lowest versus the euro in a year as a manufacturing gain and an unexpected drop in initial jobless claims spurred investors to sell the greenback and buy higher-yielding assets. The yen fell against the South Korean won and pound as the prospects for a global economic recovery buoyed the risk trade. The Swiss franc was little changed at near the highest level since July 2008 even as the central bank signaled it will maintain its stance against a stronger currency. “It’s tough to buck this trend of dollar weakness,” said Sacha Tihanyi, a currency strategist at Scotia Capital Inc. in Toronto. “The numbers are reasonably positive. In the current environment, it’s hard to call a turn.” The dollar traded at $1.4738 per euro at 10:06 a.m. in New York, compared with $1.4709 yesterday. It earlier reached $1.4767, the weakest level since Sept. 25, 2008. The yen lost 0.3 percent to 91.18 per dollar, from 90.93 yesterday, when it appreciated to 90.13, the strongest since Feb. 12. Japan’s currency slid 0.6 percent to 134.51 per euro, from 133.78. The franc gained 0.3 percent to 1.0292 versus the dollar after advancing to 1.0285, the strongest level in more than a year. The Swiss National Bank held the three-month London interbank offered rate target at 0.25 percent and said in a teleconference from Zurich that it would continue to counter the franc’s appreciation. Dollar Index The Dollar Index, which tracks the U.S. currency against the euro, yen, pound, Canadian dollar, franc and Swedish krona, sank as low as 76.010 today, the weakest level since Sept. 22, 2008. The gauge dropped 15 percent from its 2009 high of 89.624 reached in March as investors sought refuge from the financial crisis in the world’s main reserve currency. “We are getting good economic data from the U.S. that is reinforcing confidence in the global recovery,” Derek Halpenny, European head of currency strategy in London at Bank of Tokyo- Mitsubishi UFJ Ltd., said in a Bloomberg Television interview. “Until we start to see interest rates respond to the positive news from the U.S., I think the line of least resistance is to continue selling the dollar.” U.S. applications for unemployment benefits dropped by 12,000 to 545,000 in the week ended Sept. 12, from a revised 557,000 the week before, Labor Department data showed today. Economists forecast weekly claims would rise to 557,000 from a previously reported 550,000, according to the median of 34 projections in a Bloomberg News survey. Philadelphia Data The Federal Reserve Bank of Philadelphia’s general economic index increased this month to 14.1, from 4.2 in August. Positive readings signal manufacturing expansion. The median forecast of 56 economists surveyed by Bloomberg News was for an increase to 8. The yen slid 1 percent to 13.19 won and depreciated 0.5 percent to 150.76 versus the pound on speculation investors will increase carry trades, in which they sell the currency of a nation with low borrowing costs and buy assets where returns are higher. The U.S. target lending rate of zero to 0.25 percent and Japan’s 0.1 percent benchmark compare with 2 percent in South Korea and 0.5 percent in the U.K. Japan’s currency advanced earlier against the dollar and euro after Finance Minister Hirohisa Fujii said he doesn’t agree a weaker yen is necessarily good for overseas sales. “It’s an absurd idea that the cheaper the yen is, the better for exports,” Fujii, 77, said at a press conference in Tokyo. “But it doesn’t mean higher yen is always the best.”

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