The dollar spent the last day of a tumultuous year in characteristic fashion, with an uneven performance that saw it extend recent gains against the yen and turn sharply lower versus the sterling.
Versus the euro, the dollar held most of its recent gains, as traders looked to the new year for further signs that the economy is on the road to recovery.
The dollar spent most of 2009 on the defensive against other majors, particularly the euro and yen. However, a December rally has allowed the dollar to pare a portion of its yearly losses.
Recent speculation that the Federal Reserve may soon unwind unprecedented support measures taken during the worst of the economic crisis has given the dollar a boost of late.
The buck jumped above 93 on Thursday, hitting its highest level since early September. Just a month ago, the dollar was at a 1995 low of 84.80, but has fought back amid indications that Japanese officials are prepared to intervene to prevent the yen from rising any further.
The dollar held its ground versus the euro, staying near 1.4340. Last week, the dollar hit a 3 1/2 month high near 1.4200, the culmination of a move away from November's yearly low near 1.5100.
Against the sterling, the dollar plunged to 1.6236 before finding its footing in mid-day action. With the loss, the dollar pulled back from a 2-month high of 1.5831 set earlier this week.
In the final piece of economic data for the year, initial jobless claims unexpectedly fell to their lowest level in well over a year last week, providing further evidence of stabilization in the beaten down jobs market.
The Labor Department report showed Thursday that jobless claims fell to 432,000 from the previous week's revised figure of 454,000. The decrease came as a surprise to economists, who had expected jobless claims to edge up to 460,000 from the 452,000 originally reported for the previous week.
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