By Deborah Levine and Lisa Twaronite, MarketWatch NEW YORK (MarketWatch) — The dollar fell Thursday, extending a decline against major currencies after a U.S. report showed first-time claims for jobless benefits dropped more than analysts expected. The currency has been under considerable pressure in the last month as traders expect the Federal Reserve to say next week that it will buy a massive amount of government bonds, a process that would tend to weaken the dollar. The dollar index (DXY 77.27, -0.88, -1.13%) , which measures the U.S. unit against a basket of six major currencies, fell to 77.383, off about 0.8% from 78.138 late Wednesday. The euro (EURUSD 1.3927, +0.0163, +1.1843%) rose to $1.3903 from $1.3762. The British pound (GBPUSD 1.5948, +0.0175, +1.1095%) jumped to $1.5935 from $1.5758. The dollar (USDYEN 80.9800, -0.7600, -0.9298%) bought ¥80.95, down from ¥81.73 in late North American trading Wednesday. See real-time currency quotes and tools. Thursday’s decline against the yen started after the Bank of Japan decided to take no new easing steps at its latest policy meeting. The dollar then extended its losses after the Labor Department said first-time filings for unemployment benefits in the latest week fell by 21,000 to 434,000. See more on jobless claims. Most of the currency’s market focus, however, has been on expected central bank measures to stimulate the economy. The policy-setting Federal Open Market Committee meets next week, concluding on Nov. 3. Investors and analysts expect the panel to announce a second round of quantitative easing — a process akin to printing money — intended to boost lending and spending so the economy grows more and can fend off deflation pressures. The Federal Reserve Bank of New York, the central bank’s arm that conducts such operations, has asked primary bond dealers about the potential impact on yields of various amounts of QE, according to Bloomberg News. Yields on benchmark 10-year Treasury notes declined, contributing to downside pressure on the dollar, currency strategists at Citigroup wrote in a note. Read about Treasury bonds. There remains a “considerable degree of uneasiness in the market about the outcome from the FOMC meeting next week,” they said. Since Sept. 20, the day before the last Fed meeting, the dollar index has dropped 4.7%, hitting its lowest level this year in the process. The euro has gained 6.2% since then, reclaiming a 10-month high in mid-October. The dollar has declined 5.4% against the yen and touched a 15-year low at its worst level. The euro extended gains after Germany said the number of unemployed people fell under 3 million. See more on German unemployment. Bank of Japan In Japan, the central bank left its key overnight call rate unchanged, in line with expectations that it wouldn’t take any new measures. The Bank of Japan offered details of its asset-buying program and cut its growth outlook, and also moved forward its next policy meeting to Nov. 4-5 — right on the heels of the FOMC — from the previously scheduled Nov. 15-16. Read more on Bank of Japan meeting. The yen rallied over “investors’ fears that if the FOMC announces a sizable plan next week it would put the Bank of Japan under pressure to expand its own quantitative measures,” said Andrew Wilkinson, senior market analyst at Interactive Brokers.

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