Dollar bolstered by recovery in oil, positive US data

The U.S. dollar has regained some strength in recent weeks.
Getty Images
The U.S. dollar has regained some strength in recent weeks.

The dollar rose against most currencies on Thursday, bolstered by an increase in risk appetite amid a continued recovery in oil prices that has spurred a rally in some global stock markets.

The dollar index has risen in two of the last three sessions, more or less in line with the rebound in oil prices. U.S. crude futures have advanced during three of the last four trading days.

"Oil prices are starting to stabilize, which is also helping stabilize the stock market," said Juan Perez, currency trader at Tempus Consulting in Washington.

"Investors are also now seeing that things in the United States are chugging along with generally positive U.S. data. So good data plus a recovery in stocks and oil are helping the dollar."

U.S. data on Thursday provided that added spark for the dollar. U.S. weekly jobless claims fell to their lowest reading since November, while factory activity in the mid-Atlantic region contracted at a slower pace in February, suggesting the Federal Reserve could still keep rate hikes on the agenda this year.

The dollar index rose 0.13 percent to 96.91, led by the greenback's gains against the euro. Europe's common currency was last down 0.21 percent at $1.11 .

In general, improved risk appetite is broadly negative for the euro. These days, the low-yielding euro tends to struggle in times of increased risk appetite because it is often used to fund investment in risky assets. It consequently rises when there is a retreat from those assets during periods of market stress.

The dollar was also better bid against the Swiss franc, up 0.15 percent at 0.9943 franc.

The greenback, however, fell against the safe-haven yen, down 0.62 percent at 113.42 yen. The yen's gain was notable, given its failure to weaken during this period of improving market sentiment, in which investors are expected to reverse safe haven-driven gains.

Analysts said central bank policy could be a factor in the dollar-yen pair.

Eric Theoret, currency strategist at Scotiabank in Toronto, pointed to Wednesday's dovish Fed minutes, which suggested a much slower rate hike pace, given shaky global economic developments.

He also cited local media comments underscoring "a moderation in official pressure for further Bank of Japan stimulus at the meeting on March 15th."

Sterling, meanwhile, gained ahead of EU talks aimed at reaching a deal with Britain that will help keep it in the 28-country bloc in a referendum later this year.