Investing.com – The dollar fell against the yen on Thursday on news reports that a Malaysian Airlines plane went down in Ukraine not far from the Russian border, sparking fears the crisis between the countries will escalate and drag the U.S. into it.
In U.S. trading, USD/JPY was down 0.40% and trading at 101.28, up from a session low of 101.25 and off a high of 101.70.
The pair was expected to test support at 101.07, the low from July 10, and resistance at 101.80, Wednesday’s high.
Investors were tracking news reports that a Malaysian Airlines plane crashed in Ukraine, with wire reports saying the aircraft had been shot down.
The dollar began to drop as investors awaited confirmation of the plane crash and its cause.
Malaysia Airlines confirmed it lost contact with the plane, while wire reports quoting Ukraine officials said the plane was shot down.
Mixed data took a back seat to the geopolitical concerns in Ukraine, which tend to weaken the dollar by stoking fears the crisis could slow U.S. recovery.
The Federal Reserve Bank of Philadelphia said that its manufacturing index improved to a more than three-year high of 23.9 this month from June’s reading of 17.8. Analysts had expected the index to dip to 16.0 in July.
The data came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 12 declined by 3,000 to 302,000 from the previous week’s total of 305,000.
Analysts had expected jobless claims to rise by 5,000 to 310,000 last week.
Separately, the U.S. Commerce Department said that the number of building permits issued last month fell by 4.2% to 963,000 units from May’s total of 991,000. Analysts expected building permits to rise by 4.2% to 1.04 million units in June.
The dollar had found support after Ms. Yellen said Tuesday that rates could rise sooner if the economic recovery continued to improve. However, the Fed chair also said that if the recovery was disappointing monetary policy would remain accommodative.
The yen, meanwhile, was up against the euro and up against the pound, with EUR/JPY down 0.36% at 137.03, and GBP/JPY trading down 0.57% at 173.29.