By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar trimmed earlier gains versus major counterparts after closely-watched gauges of activity across the European manufacturing sector contributed to rising hopes the global economic recovery is picking up its pace.
The dollar index (DXY 81.05, -0.02, -0.03%) , which measures the greenback against a trade-weighted basket of six major currencies, traded at 81.063, virtually unchanged from the level seen in North American trade late Wednesday.
The euro traded at $1.3502 (CUR_EURUSD 1.3493, -0.0013, -0.0963%) , pressing back above $1.35 after dipping in early activity. The single currency was off slightly from the $1.3512 seen late Wednesday.
The British pound (CUR_GBPUSD 1.5232, +0.0054, +0.3584%) rose 0.3% versus the dollar to change hands at $1.5225.
The dollar also gave up a gain versus the Japanese currency to trade at 93.43 yen, unchanged on the day.
The final manufacturing-purchasing-managers index for the 16-nation euro zone released Thursday rose to 56.6 in March from a reading of 54.2 in February, exceeding a preliminary estimate for a rise to 56.3. Read about euro-zone PMI data.
The manufacturing PMI for Britain's manufacturing sector jumped to its highest level since 1994. Read about U.K. manufacturing PMI.
Overall, light activity ahead of the Easter holiday may continue to contribute to choppy trading action in forex majors, said strategists at UniCredit Bank in Milan. The euro needs to press above the $1.3575 area and toward a target at $1.3600 to sustain its recent rebound, they said.
A strong reading of Friday's U.S. nonfarm payrolls report for March, despite a weaker-than-expected ADP estimate of private-sector hiring Wednesday, could set the stage for a sharp downward correction versus the U.S. unit, they said.
The euro, meanwhile, slumped to a new all-time low versus the Swiss franc below 1.4200 francs. The move may further worsen market sentiment on the currency pair, the UniCredit strategists said.
Earlier Thursday, the dollar rose to a three-month high of 93.62 yen, according to FactSet Research data.
But the yen pared losses after the Bank of Japan's quarterly tankan survey of business sentiment showed significantly less pessimism among the nation's biggest firms, even as obstacles to recovery remained. See full story on Bank of Japan tankan.
