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Investing.com – The dollar hit a 12-year peak against the other major currencies on Thursday, as mounting optimism over the strength of the U.S. economic recovery lent broad support to the greenback.

The dollar continued to be underpinned after a report on Wednesday showed that the U.S. private sector added a larger-then-forecast 241,000 jobs in December. The upbeat data boosted the outlook for the U.S. recovery and raised expectations for a strong reading of the government nonfarm payrolls due on Friday.

On Wednesday, 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 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 euro hit fresh nine-year lows against the dollar, with EUR/USD at 1.1777, down 0.52% for the day.

The single currency remained under pressure 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 decline in consumer prices added 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 Thursday, 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.

Sterling was hovering 18-month lows against the dollar after the Bank of England’s monetary policy committee voted to hold the benchmark interest rate at 0.50% and left the size of its asset purchase program unchanged at £375 billion.

GBP/USD hit 1.5034, the lowest level since July 2013, before retracing to 1.5071, down 0.27% for 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.

The commodity-exposed Australian, New Zealand and Canadian dollars were steady to higher, but 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.

Later in the day, the U.S. was to produce its weekly report on initial jobless claims.

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