Dollar near 4-month highs vs. euro, yen higher

The dollar was trading near four-month highs against the euro on Thursday and was sharply lower against the yen as concerns over the economic outlook for the euro zone and ongoing uncertainty over a bailout for Cyprus weighed on market sentiment.

During U.S. morning trade, the dollar was near four-month highs against the euro, with EUR/USD down 0.38% to 1.2885.

Concerns over the situation in Cyprus escalated after the European Central Bank announced that it will continue to supply emergency funding to Cyprus's banks until next Monday. 

The ECB said that further funding would only be considered if an agreement with the European Union and the International Monetary Fund on a bailout is in place.

Meanwhile, concerns over the deteriorating economic outlook for the euro zone weighed after data showed an unexpected contraction in the German manufacturing sector.

The dollar fell to session lows against the yen, with USD/JPY dropping 0.93% to 95.11.

Earlier Thursday, new Bank of Japan Governor Haruhiko Kuroda said the bank is ready to use all possible options to reach its 2% inflation target, but declined to comment on whether he would call an emergency meeting to discuss more easing ahead of the bank’s next policy meeting early next month.

The dollar trimmed gains against the pound, with GBP/USD up 0.29% to 1.5141.

Sterling hit three-week highs earlier after official data showed that U.K. retail sales rose at the fastest pace since March 2012 last month, climbing 2.1% and outstripping expectations for a 0.5% increase.

The dollar pushed higher against the Swiss franc, with USD/CHF rising 0.31% to 0.9480.

The greenback was broadly lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD slipping 0.10% to 1.0248,AUD/USD rising 0.58% to 1.0437 and NZD/USD jumping 1.42% to 0.8338.

The Canadian dollar found support after official data showed that Canadian retail sales rose by a seasonally adjusted 1% in January, in line with expectations, after tumbling by 2.3% in December.

The New Zealand dollar rallied after official data showed that the country’s economy expanded 1.5% in the fourth quarter, beating expectations for a 0.9% rise.

The Aussie and kiwi were also boosted after data showed that China’s HSBC purchasing managers' index rose to 51.7 in March from 50.4 in February, indicating that the recovery in the world’s second largest economy is still on track.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.03% to 83.04. 

In the U.S., the Department of Labor said the number of people who filed for unemployment assistance last week rose by 2,000 to a seasonally adjusted 336,000, compared to expectations for an increase of 8,000 to 342,000.

A separate report showed that U.S. existing home sales rose 0.8% to a seasonally adjusted 4.98 million units in February, the highest level in three years.

Elsewhere, official data showed that manufacturing activity in the Philadelphia-region expanded at the fastest pace in three months in March, with the Philly Fed manufacturing index rising to rose to 2.0 from February’s reading of minus 12.5.

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