American focus: Dollar rises off lows on early glimpse of a second-quarter rebound

The U.S. dollar rose off its lows against the euro Thursday after signs of rising wages and falling unemployment offered a glimpse of a second-quarter rebound, lending credibility to the Federal Reserve's argument that the first quarter's slowdown was largely due to transitory factors.

The dollar shot higher against the Japanese yen and British pound after the reports, as investors bet the strong data enhance the likelihood that Fed policy makers could vote to raise interest rates at their June policy meeting.

In an updated policy statement, released Wednesday, Fed policy makers implied that an interest-rate increase in June remained a possibility.

The dollar USDJPY, +0.55% traded as high as ¥119.54 after the data, its highest level against the yen in four sessions, from ¥119.05 late Wednesday in New York. The pound GBPUSD, -0.72% weakened to $1.5364, compared with $1.5428 Wednesday.

The yen had strengthened against the dollar earlier in the global day after the Bank of Japan left monetary policy unchanged.

The euro EURUSD, +0.68% fell to $1.1128 from a session-high of $1.1256, which also was the shared currency's highest level since late February. It traded at $1.1117 late Wednesday.

The employment cost index, a closely watched measure of wage inflation, climbed 0.7% in the first quarter, beating economists' expectations for a 0.6% gain.

According to the Department of Labor, jobless claims fell to a seasonally adjusted 262,000 last week, the lowest number in 15 years.

Earlier in the session, the euro held its ground after a gauge of eurozone inflation showed no growth in April, up from negative 0.1% in March, and German jobless claims fell by a smaller-than expected 8,000.

In other currency trading, the New Zealand dollar softened after policy makers from the Reserve Bank of New Zealand decided to keep rates on hold. It USDNZD, +0.55% fell to NZDJPY, -0.32% 75.85 cents, from 76.87 cents before the announcement.

Graeme Wheeler, the governor of New Zealand's central bank, said in a statement that the New Zealand dollar remains unjustifiably overvalued.