NEW YORK (MarketWatch) -- The U.S. dollar was again on the defensive versus other major currencies Thursday, knocked down after stronger-than-expected results from J.P. Morgan Chase reinforced investor appetite for equities. Increased risk appetite has tended to hurt the U.S. dollar and the Japanese yen, denting safe-haven flows into those currencies. The U.S. unit took another hit after the Labor Department reported jobless claims fell to their lowest level since January. Also, the Philadelphia Fed reported that recent improvement in the manufacturing sector in the Philadelphia region paused in July, as the Philly Fed index fell to a negative 7.5. Still to come in the session is a report on homebuilder's confidence. CUR_EURUSD 1.41, +0.00, +0.05% 1.501.401.301.20 09FMAMJJ J.P. Morgan Chase (JPM 35.89, -0.37, -1.02%) said net income rose to $2.72 billion, or 28 cents a share, in the second quarter. Analysts had forecast earnings of 4 cents a share. See full story. U.S. stock index futures rose slightly on the results. European stocks were also higher. Read Indications. See Europe Markets. Earlier, speculation that lender CIT Group (CIT 0.39, -1.25, -76.10%) may file for bankruptcy after rescue talks with the U.S. government failed had boosted worries about the health of the financial sector, boosting the dollar and the yen. See full story. Meanwhile, somewhat stronger-than-expected second-quarter economic growth in China received a muted reaction in currency markets, traders said, coming in not far off consensus. China said Thursday that its gross domestic product grew 7.9% from the year-earlier period, as government-led stimulus measures and strong bank lending spurred domestic consumption and industrial activity. See Economic Report on China GDP. The dollar index (DXY 79.36, +0.05, +0.06%) , which tracks the greenback against a trade-weighted basket of six major rivals, erased a small early gain to trade at 79.241 in recent action, compared with 79.437 in North American trade late Wednesday. The U.S. dollar slipped against its Japanese counterpart, to 93.57 yen from 94.22 yen Wednesday. The euro bought $1.4125, up from $1.3964. The euro's "break above $1.4050-$1.41 was clearly spurred by the renewed market attitude" toward risk, wrote strategists at UniCredit MIB in Milan. "We remain net buyers [of euro versus the dollar] for now, with the next target at $1.42" returning to the radar screen. The British pound also benefited from the increased tolerance for risk. It fetched $1.6429 versus the dollar, up from $1.6316. Kiwi redux The kiwi stole the currency spotlight in Asian activity Thursday, slipping against the U.S. dollar after Fitch Ratings downgraded its outlook on New Zealand's economy. The New Zealand dollar fell as low as 63.83 U.S. cents. In recent action, it changed hands at 64.52 U.S. cents, a loss of 0.5%. 2.252.001.751.501.25 ASON09FMAMJJ Fitch downgraded New Zealand's sovereign outlook to negative, due to its higher current-account deficit and foreign debt. "The kiwi was kneecapped in midday Asian trade" after the Fitch announcement, said Boris Schlossberg, director of currency research at GFT Forex. "Given the fact that New Zealand's growth is highly dependent on Chinese demand, which showed a healthy rebound in Q2 as GDP expanded to 7.9%, it is a bit puzzling as to why Fitch chose to single out the kiwi economy at this particular time," Schlossberg said in e-mailed comments. "Perhaps the rating agency expects global growth to slow in the second half of the year, and under that scenario the pressure of the current-account deficit would begin to weigh heavily on the country's finances," he said.

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