By Frances McInnis Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The dollar fell Thursday as speculation mounted that the Federal Reserve could take further action to prop up the U.S. economy. The greenback dropped to its lowest level since Jan. 19 against the Swiss franc, which has been on an upward march in recent days. The dollar was also down slightly against the yen, despite Japanese officials again ramping up their rhetoric against recent yen strength. Gains in U.S. equity markets also helped higher-yielding currencies, including the euro and the Canadian, Australian and New Zealand dollars, to advance against the greenback. The greenback also fell against the U.K. pound. Sterling was supported by the lift in market sentiment and strong U.K. retail sales, which rose above a three-year high in August. Markets are awaiting comments out of the weekend's annual meeting of the world's top central bankers in Jackson Hole, Wyo., for further direction, with Federal Reserve Chairman Ben Bernanke's speech on Friday being the main event. "A clearly laid out explanation of the Fed's actions and a sense of understanding of the extent of the slowdown might help alleviate market stresses," and put further downward pressure on the dollar, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. Thursday morning, the euro was at $1.2740, up from $1.2655 late Wednesday, according to EBS via CQG. The dollar was at Y84.50, from Y84.78. The euro was at Y107.67 from Y107.20. The U.K. pound was at $1.5583 from $1.5450. The U.S. dollar was at CHF1.0241, a recovery from a seven-month low at CHF1.0222, but down from CHF1.0291. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.758 from 83.275. The rebound in the euro and other riskier currencies doesn't necessarily mean investors have become more optimistic about global growth, said analysts at TD Bank. Rather, it reflects an expectation that this week's run of "ghastly" U.S. data will prompt the Fed to plan further quantitative easing. A recent string of U.S. data has raised deep concerns about the viability of the U.S. recovery. While U.S. jobless claims on Thursday showed the number of workers making new claims fell last week by more than expected, claims still remain at an elevated level. The euro's gains also came on the back of rallies in both Asian and European markets, and better-than-expected results from a German consumer sentiment index. Analyst said the euro's rise may be short-lived as concerns about countries on the euro zone's periphery still simmer. Analysts say the common currency would be particularly vulnerable to a global slowdown since countries engaged in deep fiscal consolidation would be unlikely to hit the tax revenue they have projected. Separately, senior Japanese Vice Finance Minister Motohisa Ikeda said Thursday that the Bank of Japan should promptly take appropriate steps to support the economy, suggesting his desire for the central bank to ease monetary policy further in the near term. "I hope the BOJ will do its utmost," Ikeda said at a regular press conference. "Exiting deflation remains the most important goal for us and I am also very concerned about the recent yen gains." His remarks are the latest example of growing government pressure on the central bank. And the BOJ may soon accept such requests, as officials there recently told Dow Jones Newswires that they are ready to act depending on the market conditions. "Direct intervention...still feels a distant threat," said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole CIB in London. "Instead, the more likely candidate remains an expansion of Japanese non-conventional monetary policy." -By Frances McInnis, Dow Jones Newswires; 212-416-3417; frances.mcinnis@dowjones.com

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