NEW YORK – The U.S. dollar sank to a two-year low against the 13-nation euro on Thursday, ahead of the Easter holiday, after the government reported increased unemployment.
The euro reached $1.3442, the highest since March 2005, before retreating to $1.3427. It traded at $1.3367 Wednesday.
The dollar bought 118.68 Japanese yen in late New York trading, up slightly from 118.67 yen.
The British pound dropped to $1.9704 from $1.9753 after the Bank of England held interest rates steady at 5.25 percent.
Many investors speculated the BOE would raise interest rates by another quarter point. Higher interest rates can bolster a currency by giving better returns on certain types of investments.
The euro has traded recently near its all-time high of $1.3667, set in December 2004, on concerns over the U.S. economy and its massive trade and budget deficits.
The dollar fell Thursday after the U.S. Labor Department reported that newly laid-off workers signed up for unemployment benefits at a faster pace last week as companies try to cope with sluggish growth in the national economy.
New applications filed for jobless benefits rose by a seasonally adjusted 11,000, to 321,000, for the work week ended March 31.
The dollar already was weak from Wednesday, when the U.S. Institute for Supply Management reported its index of non-manufacturing business activity came in at 52.4 in March, falling from 54.3 in February.
Economists had expected a reading of 54.7. Figures above 50 indicate expansion.
Overall, the survey indicated that sluggishness in other areas of the economy, including manufacturing and housing, is beginning to spread.
In other trading, the dollar bought 1.2152 Swiss francs, down from 1.2204 late Wednesday, and 1.1506 Canadian dollars, down from 1.1586.
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