Early trade in New York: Dollar drops broadly after Fed launches new loan program

The dollar dropped broadly on Thursday after the Federal Reserve rolled out a $2.3 trillion effort to bolster local governments and small and mid-sized businesses in its latest move to keep the US economy intact as the country battles the coronavirus pandemic.

The central bank's announcement came as data showed that the number of Americans seeking unemployment benefits topped 6 million for the second straight week, with businesses closed across the country in an attempt to stem the spread of the virus.

"The Fed's bold efforts helped to offset more horrific news on the job market. I would say that the Fed's forceful action today underscores the unlimited firepower that the central bank wields and that's going some way into sustaining the calm that's descended on markets this week," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The Federal Reserve will continue to use all the tools at its disposal until the US economy begins to rebound fully from the harm caused by the novel coronavirus outbreak, Fed Chair Jerome Powell said on Thursday, even as he acknowledged the limits of the central bank's powers.

The dollar index measuring the greenback against a basket of currencies fell to a one-week low of 99.50.

Riskier currencies, including the Australian dollar, continued to outperform on Thursday. It gained 1.11% to $0.6295, the highest in over three weeks.

The dollar dipped 0.15% against the Japanese yen to 108.81 yen.

The euro gained 0.64% to $1.0926.