The dollar and yen continued to rise against other major currencies on Thursday as bleak data around the world dented optimism about a global economy recovery, boosting safe-haven flows into the U.S. and Japanese currencies. The dollar, however, dropped to 98.51 against the yen in earlier session before rebounding on renewed cross-selling in yen, last trading at 99.32 in late New York afternoon session.

The single currency fell to as low as 1.3126 versus the dollar and 129.36 against the yen after data showed industrial production in Europe contracted by the most on record in February. The deepening global recession curtailed demand for manufactured goods around the world and output in the eurozone fell 18.4 percent from the year-earlier month, the biggest drop since the data series began in 1986.

In other currencies, the British pound reversed early rally and fell sharply from 1.5069 to as low as 1.4838 against the dollar and from 149.83 to 146.62 versus the yen after the release of weaker-than-expected Chinese growth and poor U.S. industrial production data. Meanwhile, high-yielding currencies such as the Australian dollar and the New Zealand dollar dropped to session lows of 0.7132 and 0.5680 against the U.S. dollar respectively before stabilising.

On the data front, reports from U.S. showed that housing starts fell 10.8 percent to an annual rate of 510,000 in March and building permits, a sign of future construction, fell 9 percent to 513,000 last month. A separate government report showed that initial jobless claims dropped to 610,000 from 663,000 the week before while manufacturing in the Philadelphia region contracted in April at a slower pace than consensus forecast as orders began to stabilise, increased to minus 24.4 this month from minus 35 in March

On Friday, economic data releases include New Zealand CPI data, Japan tertiary industrial index and consumer confidence, Switzerland’s retail sales, eurozone trade balance, Canada CPI data, and U.S. University of Michigan survey. ECB President Jean-Claude Trichet will give keynote speech at the annual plenary session of the Research Institute of Japan at 03:00GMT, and later in the day, Fed chairman Ben S. Bernanke will speaks to the Fed’s community-affairs conference at 16:00GMT in Washington.