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NEW YORK: The dollar wobbled against the euro Thursday after US data reinforced jitters about weak growth in the world's largest economy that sent oil prices sharply lower for a third day.
The euro was at 1.5850 dollars around 2100 GMT, up from 1.5821 dollars late Wednesday.
The dollar strengthened against the yen, to 106.37 from 105.12 on Wednesday.
The dollar turned softer against the euro following publication of an index measuring industrial activity in the US mid-Atlantic region that, while it had improved, nevertheless came in lower than analysts had expected.
Separately, the Labor Department reported that the number of first-time claims for unemployment benefit in the United States in the week ending July 12 rose by 18,000 to 366,000. In the previous week, claims had fallen sharply by 56,000.
The two reports weighed down on the dollar's ability to find support amid a surprise 9.1 percent rebound in US housing starts in June and news of a better-than-expected performance by JPMorgan Chase.
The Wall Street investment bank said its profit had taken a hit in the second quarter from more write-downs linked to real estate and credit problems and its takeover of Bear Stearns, but the results managed to top most analyst estimates.
The US banking giant reported a 53 percent drop in net profit from a year ago to 2.0 billion dollars.
That amounted to 54 cents per share, comfortably above the Wall Street estimate of 44 cents per share and provided positive news for the banking sector ravaged by the housing crisis and credit squeeze.
The euro meanwhile was well-bid after comments from European Central Bank governing council member Nout Wellink.
Wellink told Elsevier magazine that a slower eurozone economy would not reduce inflation, adding that the experience of the 1970s showed that if action were not taken promptly to contain inflation, it could persist for the long term.
"It's a mistake to think that inflation will fall if the economy weakens ... We have seen that too in the '70s," he said.
In addition, a report in the Financial Times that some of the world's largest sovereign wealth funds are diversifying out of their dollar-denominated assets also underpinned the single European currency.
The FT said one major fund in the Gulf has cut its dollar-denominated holdings from more than 80 percent to less than 60 percent over the past year.
"If today's article in the FT is to be believed, then there is little question of downward pressure upon the dollar abating any time soon," said Neil Mellor at Bank of New York Mellon.
Boris Schlossberg at Forex Capital Markets said the article's suggestion that China's State Administration of Foreign Exchange (SAFE) had been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its dollar holdings was "more troubling."
"Should their appetite for US securities suddenly wane, the greenback could see further selling as fears over financing of (the) US current account deficit will resurface once again," he said in a client note.
In late New York trading, the dollar edged up to 1.0197 Swiss francs from 1.0176 Wednesday.
The pound was at 2.0014 dollars, up from 1.9986.
- AFP/so
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