LONDON (MarketWatch) -- The U.S. dollar rose on Thursday as investors took profits from low-yielding rivals like the Japanese yen after the previous day's turmoil which saw the Dow Jones Industrial Average slump 733 points.
The dollar rose 0.7% to 100.53 yen, recapturing the 100-yen level that serves as a barometer of the fear in broader markets. See related story.
The dollar index , which measures the greenback against a basket of currencies, rose 0.6% to 82.87.
The euro fell 0.3% to $1.3421, though the British pound rose 0.6% to $1.7236.
The recovery comes after a flurry of weak economic indicators released on Wednesday, notably U.S. retail sales which dropped the most in three years.
Downbeat comments from Federal Reserve Chairman Ben Bernanke and, late Tuesday, from San Francisco Fed President Janet Yellen, also contributed to the bearish tone.
"The euphoric response to the policy initiatives have more or less evaporated across a range of markets as Fed Chairman Bernanke provided an exceptionally downbeat outlook of the U.S. economy," noted UBS economists.
Analysts at Societe Generale were skeptical the greenback can sustain the recovery.
"The scale of net longs in the U.S. dollar amongst the speculative community may be constraining the ability of the dollar to rally convincingly despite returning risk aversion," they said.
There's also a flurry of economic data due later, notably consumer prices for September, weekly jobless claims, industrial production for September, a Philadelphia-area manufacturing survey for October and the NAHB housing index for October.
"Industrial production is expected to decline in September, the Philly Fed is seen sharply lower, and the NAHB may relapse in October," said Philipp Baertschi, an analyst at Sarasin in a note to clients. "The moderation in inflation is a positive, but it is clear now that deflation will be a bigger worry going forward than inflation."
The Swiss franc also traded lower, as the dollar rose 0.8% to 1.1405 francs. Like the yen, the low-yielding franc benefits when investors shed risk and struggles when they add it.
But there also was news of local importance, as the Swiss central bank said it will take up to $60 billion of troubled assets off UBS' books and rival Credit Suisse said it would raise 10 billion francs.
