TORONTO (Dow Jones)--The dollar is higher against the Swiss franc and the British pound but little changed against other major rivals Thursday as the Thanksgiving Day holiday in the U.S. results in reduced trading flows.
Light trading and a slightly healthier investor appetite for risk in overnight trading enabled the euro to stabilize after sharp selling in earlier sessions. The respite for the common currency is expected to be brief as the fiscal crisis in Ireland and concerns about other peripheral economies in the euro zone continue to fester.
Higher U.S. Treasury yields helped the dollar hold its ground broadly despite the improved sentiment toward risk.
Thursday morning, the euro was at $1.3330 from $1.3327 late Wednesday, according to EBS via CQG. The dollar was at Y83.57 from Y83.62, while the euro was at Y111.40 from Y111.43. The U.K. pound was at $1.5729 from $1.5766. The dollar was at CHF1.0003 from CHF0.9966.
The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 79.860 from 79.800.
The dollar's gains against the Swiss franc took it above the parity level with that currency for the first time since Sept. 21, with the dollar reaching a session high of CHF1.0021 before receding slightly, according to EBS via CQG.
Market positioning is helping drive the greenback's gains against the Swiss franc, and it could continue to push higher against that currency, said Elsa Lignos, G10 foreign exchange strategist at RBC Capital Markets in London.
"Clearly if it manages to remain above parity and close above parity then that sets it up technically for a bit of a move higher," she said.
The euro remains overshadowed by Europe's sovereign debt crisis as the announcement of Ireland's four-year budget plan Wednesday failed to increase confidence in the country's ability to avoid a debt default.
The Irish austerity proposals, which will cut spending by EUR10 billion, are likely to further reduce the ruling coalition's chances of survival in a general election expected early next year.
The first test of the government's position will come early Friday, when the results of a by-election in County Donegal held Thursday will be declared.
"Ireland is as yet an unresolved problem for policy-makers, with an important vacant parliamentary seat election today set to cut the [government] majority to just two, ahead of a critical Dec. 7 budget vote," said currency strategists at ING in London.
"The inability so far to convincingly ring-fence the Irish situation is feeding worry over Portugal and Spain," ING said.
Concerns are mounting that a EUR750 billion rescue mechanism created by the International Monetary Fund and the E.U. may run out of cash if debt-burdened Spain and Portugal follow Ireland's example and request a bailout.
The British pound was under selling pressure Thursday, dropping to its lowest level since Oct. 26 at $1.5725, according to EBS via CQG, before rebounding modestly, as members of the Bank of England's monetary policy committee testified before a parliamentary committee.
"The MPC members have placed emphasis on the downside risks to inflation over the medium term from spare capacity, also highlighting the constraints on spending from weak money growth and household balance sheet adjustment," said currency analysts at BNP Paribas.
Elsewhere, the yen weathered a further deterioration in Japan's trade position, with October data showing that export growth is slowing sharply.
Exports rose by only 7.8% on the year after the 14.3% increase registered in September.
Canada Morning
The Canadian dollar is slightly higher Thursday morning as it extends its gains from Wednesday in quiet trading.
The U.S. dollar is at C$1.0097 from C$1.0115 late Wednesday.
The Canadian unit showed little reaction to news that average weekly earnings increased by 4.3% from a year ago in September.
"In line with the rest of the currency market, trading in [the Canadian dollar] was very quiet overnight with only about a 40-point range around the 1.01 area," said TD Securities.
-By Don Curren, Dow Jones Newswires; 416-306-2020; don.curren@dowjones.com
--Nicholas Hastings in London and Nina Koeppen in Hamburg contributed to this article.
