Hope from earnings, jobs data end dollar rally

NEW YORK — The dollar gave up some midweek gains Thursday, fading again as better-than-expected corporate earnings and a downward trend in unemployment data rallied demand for stocks, emerging-market investments and other “riskier” investments.

Bad signals from economic reports and poor earnings tend to help the dollar as investors seek safety, often in U.S. government debt; good news and stronger equities usually correspond with a drop in the greenback’s value.

The 16-nation euro picked up some steam Thursday afternoon, rising to $1.4078 in late trading from $1.4008 late Wednesday in New York. The euro had hit a high for the year at $1.4303 in European trading Tuesday but had slumped since then, falling as low as $1.4005 Wednesday as stocks stayed in the red.

The British pound shot up to $1.6489 Thursday from $1.6358.

The dollar rose, however, to 95.60 Japanese yen from 94.99 yen late Wednesday. The low-yielding yen is also considered a “safe haven” currency.

The stream of corporate earnings being reported this month are giving stocks a boost at the expense of the dollar. On Thursday, for example, electronics company Motorola Inc. posted an unexpected second-quarter profit thanks to heavy cost cutting, while chemicals maker Dow Chemical Co.’s posted a 31 percent drop in sales but better-than-expected adjusted results.

UBS analysts said that so far, about 80 percent of companies in the Standard and Poor’s 500 have beaten expectations.

The S&P 500 index rose 2 percent in late afternoon trading, while the Dow Jones industrial average was up 1.7 percent. That followed big gains in European markets and a 1.7 percent climb in Shanghai’s main index.

A government report on jobs also helped tamp down demand for the dollar and ratchet up appetite for high-yielding currencies such as the Brazilian real, Turkish lira and South Korean won Thursday.

The Labor Department said that while initial claims for unemployment aid rose by 25,000 to a seasonally adjusted 584,000 last week, the four-week average of claims fell to 559,000, which is the lowest level since January. Those continuing to file for aid fell to 6.2 million, which is the smallest amount since mid-April.

Economists say there’s a downward trend in job losses — key to a healthy economic recovery.

That hope for recovery is helping hold down the dollar for now, economists say, as investors seek out currencies from countries with a less-stable economy than the U.S. but higher interest rates.

In other trading Thursday, the dollar slipped to 1.0880 Swiss francs from 1.0895 late Wednesday, and dropped to 1.0830 Canadian dollars from 1.0915.