NEW YORK (MarketWatch) -- The dollar fell to the lowest level in nearly three months against the euro Thursday, with the greenback extending its loss versus the Japanese yen, amid positive confidence data for Europe and more downbeat comments about the U.S. credit rating and economic growth. What To Believe, Bonds Or Equities? Bond markets have been considered a better predictor of the future than equities. Given the different signals bonds and equities are giving about the economy's prospects, that might be important now. But bond investors have been known to get things drastically wrong, as they did in 2007. The euro (EURUSD 1.3196, -0.0038, -0.2872%) rose to $1.3094, near its highest in about three months, from around $1.2985 in North American trading late Wednesday. The euro touched $1.3106 on an intraday basis, eclipsing the high of $1.3094 on May 10, the first business day after the European Union and the International Monetary Fund announced a nearly $1 trillion loan program designed to keep the debt crisis from spreading beyond Greece to other vulnerable countries. The dollar index (DXY 80.71, +0.12, +0.15%) , which tracks the U.S. unit against a basket of major currencies, stood at 81.559, down from 82.139 late Wednesday. The dollar fell against the yen (USDYEN 85.4600, -0.4100, -0.4776%) to ¥86.92, down from ¥87.35 Wednesday. The greenback extended losses as U.S. stock indexes turned negative. The euro (EURYEN 112.7800, -0.6900, -0.6081%) gave up earlier gains to buy ¥113.83, versus ¥113.44. Since the credit crisis began, the dollar has tended to react more to movements in equities as an indication of investor demand for the relative safe-haven status of the dollar and other low-yielding currencies, including the yen. The dollar stayed down in afternoon action as traders position themselves for Friday's report on U.S. economic growth. The gross domestic product is expected to have grown at a 2.5% in the second quarter, according to a survey of economists by MarketWatch. That's down from predictions closer to 4% earlier and would be a slower pace than the 2.7% rate in the first quarter. See preview of GDP. 'We're consolidating before tomorrow's GDP," said John Doyle, a currency strategist at Tempus Consulting. "If it turns out stronger, it may have a positive effect on equities, which would weaken the dollar." Two Federal Reserve officials said the U.S. is may grow at a "suboptimal" pave and is close to experience Japanese-style deflation. Read Fed comments on deflation. The gains in the euro started in the European session, as earnings releases boosted European stocks, contributing to an increase in overall risk appetite to the detriment of the dollar, said Manuel Oliveri, currency strategist at UBS. The dollar wasn't helped by a report that Moody's Investors Service top sovereign analyst for the U.S. reiterated that the nation's triple-A credit rating could eventually come under scrutiny unless the government presents a credible fiscal consolidation plan, Oliveri said. All week, the euro has failed to recapture levels "last seen on May 10 as the world woke up to news of the $1 trillion EU bailout," strategists at RBC Capital Markets said. "The suggestion that the U.S.'s AAA rating could come under question was enough to trigger a spike higher in euro-dollar." Separately, the European Commission's economic-sentiment indicator rose for July, supporting the rally in the shared currency. Read about euro-zone sentiment. TODAY'S TOP MARKET STORIES S&P 500 (1 YEAR) 1,3001,2001,1001,000900 10SNFAJ • Market Snapshot: U.S. stocks in focus • Today's biggest advancing, declining stocks • Sign up for free, breaking-news email alerts EARNINGS WATCH | Earnings, updates, warnings THE MARKET BY SECTOR | Industries • Tech Stocks | Energy Stocks | Retail Stocks • Financials | Airline Stocks | Pharma and Biotech EXPANDED MARKETS NEWS • Bonds | Oil news | Gold news • Currencies | Market Data | Economic Calendar • See all the latest markets video The dollar stayed lower after the U.S. Labor Department said the number of claimants filing for first-time jobless benefits fell 11,000 to 457,000 in the latest week -- a little better than economists surveyed by MarketWatch anticipated. See more on jobless claims.

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