The U.S. dollar rose against most other major currencies on Thursday, as data reinforced hopes that the pace of economic decline may be slowing, boosting demand for the greenback.
The dollar index , a measure of the greenback against a trade-weighted basket of currencies, traded at 85.119, up from 84.667.
Early economic data showed a decline in initial jobless claims, a plunge in U.S. housing starts and a slower rate of decline in manufacturing in the Philadelphia region.
"The U.S. economy is starting to show some tentative signs of stability, while other economies, especially the euro zone, have a number of question marks over it," said David Watt, senior currency strategist at RBC Capital Markets.
"You get this backdrop where it's still largely not really a bullish backdrop, but an environment where the news is supportive of the U.S. dollar," Watt said.
The British pound dropped 0.6% against the greenback to $1.4897.
The greenback pared nearly all of its earlier losses against the Japanese yen. It was last down less than 0.1% at 99.28 yen.
On Wall Street, U.S. stocks were mixed in volatile trading, as investors digested economic data and better-than-expected results from J.P. Morgan Chase . The bank said profit fell 10%, but that was still better than the market anticipated.
"Literally what we've got is when equity markets do well, we see the dollar struggling, and when equities are struggling, the dollar does well," Watt said.
The dollar has tended to gain ground during periods of economic uncertainty and financial turmoil, benefiting from falling equities as investors flee into other dollar-denominated assets. The yen has benefited from similar flows.
Conversely, rising equity markets and have tended to undercut the dollar and the yen as investors show more tolerance for risk.
The pound, among other currencies, has suffered as investors flee riskier assets.
Glimmers of hope?
Currency traders combed through a batch of economic data from the U.S. and around the world.
"The road ahead is rocky, and it is likely littered with all sorts of hurdles and landmines," said Jennifer Lee, economist at BMO Capital Markets.
"But let's focus on the fact that there is a slowly, albeit tentatively, growing list of better news emerging," Lee said in a research note.
Manufacturing activity in the Philadelphia region worsened in April for the 16th time in the past 17 months, but at a slower pace, the Federal Reserve Bank of Philadelphia reported Thursday.
The Philly Fed index increased to negative 24.4 from negative 35 in March. Readings below zero indicate most firms surveyed said business was still getting worse. Expectations improved, suggesting that "the region's manufacturing executives expect declines to bottom out over the next six months," the bank said.
Separately, first-time claims for state unemployment benefits in the latest week fell to their lowest level since the end of January, the Labor Department reported Thursday, even as continuing jobless claims remained at a record high.
