On Thursday the greenback hit 12-year highs versus its peers, as growing optimism over the strength of the U.S. economic recovery lent broad support to the dollar.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.46% at 92.64, the highest level in 12 years.
The dollar continued to be supported after a report on Wednesday showed that the U.S. private sector added a larger-then-forecast 241,000 jobs in December. The positive data boosted the outlook for the U.S. recovery and raised expectations for a strong reading of the government nonfarm payrolls due on Friday.
Yesterday, the minutes of the Federal Reserve’s December meeting did little to alter expectations that U.S. interest rates will start to rise later this year.
The euro hit fresh nine-year lows against the dollar, with EUR/USD at 1.1777, down 0.52% for the day.
The single currency maintained pressured after data on Wednesday showed that the annual rate of euro zone inflation fell by 0.2% in December, down from 0.3% in November. It was the first fall in the annual rate of inflation since October 2009.
The plunge in consumer prices contributed to expectations that the European Central Bank could implement quantitative easing as soon as its next meeting on January 22. Late last week ECB President Mario Draghi said the risk of it not fulfilling its mandate of price stability is higher now than six months ago.
Earlier today, a report showed that the euro zone's retail sales rose 0.6% in November, exceeding expectations for a 0.1% uptick. October's figure was revised to 0.6% gain from a previously estimated 0.5% rise.
The U.S. is expected to produce its weekly report on initial jobless claims later in the day.
Elsewhere, the dollar gained ground against the yen, with USD/JPY up 0.42% to 119.73, while USD/CHF climbed 0.52% to 1.0198.
Although the commodity-exposed Australian, New Zealand and Canadian dollars were steady to higher, they still remained within close distance of multi-year lows, as a rout in global oil prices continued.
AUD/USD advanced 0.40% to 0.8108, NZD/USD edged up 0.13% to trade at 0.7790 and USD/CAD held steady at 1.1818.
The Australian Bureau of Statistics earlier reported that building approvals increased by 7.5% in November, confounding expectations for a 3.5% decline. Building approvals rose by 11.5% in October, whose figure was revised from a previously estimated 11.4% gain.
