Dollar drops broadly

The dollar dropped broadly on Thursday, with investors opting to book profits, particularly against the yen, which had hit an 11-month high after nearly six straight weeks of gains. The greenback fell from a one-month peak against the euro as front-end US Treasury yields, which move inversely to price, turned lower, reducing its appeal.
A broadly positive dollar outlook in recent months has contrasted with the travails of other currencies. The euro has been hampered by sovereign debt concerns, the yen by speculation that the Bank of Japan may ease policy further, and the Australian dollar by worries about Chinese growth. "To an extent, today's markets reflect consolidation after the sizable recent moves in the US Treasury yields, precious metals and currencies such as the Japanese yen," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.
"There has, however, been little change to the overall theme of an improvement in the US economic picture, with today's jobless claims data supporting the notion of further solid US job gains." The number of Americans claiming new jobless benefits slid to a four-year low last week and manufacturing activity in the Northeast picked up this month.
In late New York trade, the dollar was down 0.2 percent against the yen at 83.46 yen, having reached 84.17 in early trade, its highest since April 2011. Stiff resistance was seen at the 85-yen mark, although strategists said there was an increasing chance it could rise beyond last year's high of 85.54 yen, according to Reuters data. The euro rose 0.4 percent against the greenback to $1.3084 after touching a one-month low of $1.3002. Traders reported hefty stop-loss orders below $1.30.
There is talk of a $1.3000/$1.3500 barrier in play, according to Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut. "This would make sense, given the supply in EUR/USD ahead of $1.3500 and demand ahead of $1.300," he said. "I remain not in the view that US yields will now begin a climb higher, and these past few weeks have been a short-term phenomenon that the market has decided in a momentum way to construe a change in policy from the Fed."
The Swiss franc strengthened against the euro and dollar after the Swiss National Bank maintained its 1.20-franc cap against the euro. On Wednesday, the Swiss franc hit a one-month low against both currencies. The euro hit a session low of 1.2063 francs before paring losses to trade around 1.2070 francs, down 0.5 percent for the day. The dollar touched a low of 0.9197 francs before last trading at 0.9224, down 0.8 percent. The Australian dollar recouped earlier losses to rise 0.7 percent to $1.0528, having hit an eight-week low of $1.0419 after Chinese Premier Wen Jiabao doused hopes of relaxing control over the property sector.