Dollar mixed against rivals
U.S. currency retreats against the yen, pound as investors respond to grim economic data and talk of lower interest rates in Europe.
NEW YORK (CNNMoney.com) -- The U.S. dollar was mixed against rival currencies Thursday as investors responded to dour economic reports and bet on additional interest rate cuts in Europe.
The euro was down 1.6% to $1.2966 amid reports that the European Central Bank could cut interest rates below 2%. The 15-nation currency traded at $1.3138 late Wednesday in New York.
Britain's pound, meanwhile, edged up 0.2% versus the dollar to trade at $1.4275 from $1.4193.
Japan's yen was up 0.5% against the dollar at ¥89.78. The euro tumbled 1.8% against the yen to ¥116.59.
"Risk aversion is returning after the jobs data and durable goods report," said Kathy Lien, director of currency research at Global Forex Trading in New York. Both reports "highlight the continuing problems in U.S. economy."
Labor Department figures showed the number of out-of-work Americans receiving unemployment checks rose to the highest level since the government began keeping records in 1967.
First time claims for jobless benefits rose by 3,000 to 588,000 last week, which exceeded economists' expectations of 575,000 claims.
Separately, the Commerce Department reported that new orders for durable goods, big-ticket items such as airplane parts or refrigerators, fell for the fifth consecutive month in December.
Many investors view the dollar as a safer alternative to more risky assets such as stocks and high-yield currencies. As a result, the greenback often gains strength when the economic outlook darkens.
"The market is not in a position to feel overly confident and start investing again," said Gareth Sylvester, senior currency strategist at currency brokerage HiFx in San Francisco. "People are sitting on the sideline with their cash."
Still, Thursday's economic data are "lagging indicators," which the market has "priced in to the global economy," he said.
Analysts are waiting for economic reports from the first quarter to see "if the recession has matured or is weakening," Sylvester said. Until then, "we're in a holding pattern." 
