By Karen Brettell
NEW YORK (Reuters) - The dollar index was little changed on the day on Thursday as investors balanced bullish data showing U.S. retail sales rose by the most in 10 months in March against a continued drop in U.S. Treasury yields.
Retail sales increased 9.8% last month, the Commerce Department said on Thursday, beating economists' expectations for a 5.9% increase.
A separate report also showed first-time claims for unemployment benefits tumbled last week to the lowest level since March 2020, when mandatory closures of nonessential businesses were enforced to slow the spread of the first COVID-19 wave.
“This was a one-two punch of really positive data,” said Edward Moya, senior market analyst at OANDA in New York.
Dollar strength was capped, however, as Treasury yields dropped to one-month lows, reducing the relative attractiveness of the U.S. currency. [US/]
The dollar index earlier on Thursday hit a one-month low of 91.487, before rebounding to 91.608, unchanged on the day.
The euro fell 0.04% to $1.1975. It reached a six-week high of $1.1994 earlier on Thursday.
The greenback fell 0.23% to 108.65 Japanese yen.
The dollar has been on the back foot this month as Treasury yields stabilize below one-year highs reached last month. Yields have fallen as the U.S. Federal Reserve reiterates its commitment to holding rates near zero for years to come, and on some concerns that a recent uptick in inflation will be temporary.
San Francisco Fed President Mary Daly on Thursday said the U.S. economy is still far from making "substantial progress" toward the central bank's goals of 2% inflation and full employment, the bar the Fed has set for beginning to consider reducing its support for the economy.
Strong risk appetite as stocks hit record highs is also seen as denting the appeal of the greenback. [.N]
The Australian dollar, a proxy for global risk sentiment, rose 0.42% on Thursday to $0.7755.
Rising geopolitical tensions may be helping demand for safe-haven U.S. bonds on Thursday.
“We’re seeing more risks across emerging markets right now, and that’s probably going to keep some Treasury demand going,” said Moya.
The Russian rouble tumbled on Thursday, at one point losing 2% to the dollar in volatile trade and hitting a more than five-month low versus the euro as the White House announced new sanctions targeting Russia's sovereign debt.
U.S. President Joe Biden on Thursday authorized the move to punish Moscow for interfering in the 2020 U.S. election - allegations Russia denies.
Biden will deliver remarks on Russia at 4:30 p.m./2030 GMT on Thursday.
Bitcoin stood near a record high of $64,895 reached on Wednesday, when cryptocurrency platform Coinbase made its debut in Nasdaq in a direct listing. It was last down 0.12% on the day at $62,910.
Graphic: World FX rates https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html
(Reporting by Karen Brettell; additional reporting by Ritvik Carvalho in London; editing by Jonathan Oatis and Chizu Nomiyama)