By Chelsey Dulaney

The dollar slipped Thursday as higher oil prices and strength in the British pound offset upbeat U.S. data.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, was recently down 0.1%, to 91.86. The index pared some losses after a strong U.S. manufacturing report.

The index was weighed by a resurgent British pound, which soared to its highest level since October after a U.K. official said Britain could secure access to the European Union's trade market by paying for it. The pound was recently up 1%, to $1.263.

The currencies of oil-linked countries also rallied as crude continued to strengthen in the wake of Wednesday's Organization of the Petroleum Exporting Countries agreement to cut oil production. The dollar was down 0.5% against the Canadian dollar and 0.9% against the Norwegian krone.

Meanwhile, data released Thursday indicated that the U.S. economy remains strong.

The Institute for Supply Management's gauge of U.S. factory activity came in stronger-than-expected in November, the latest sign that the manufacturing sector is recovering.

A separate report showed jobless claims rose last week but remained at a low level consistent with a healthy U.S. job market.

The data comes ahead of Friday's closely watched monthly jobs report, seen by many investors as the clearest read on the health of the U.S. job market.

Investors are already confident that the Fed will raise interest-rates at its meeting this month, but strong U.S. hiring data could lift expectations for further tightening in 2017.

"If key releases continue to comein very strong, markets may begin to consider whether the Fed could deliver additional rate hikes next year," wrote analysts at BNP Paribas in a research note. That would likely support the dollar as higher rates makes the currency more attractive to yield-seeking investors.

Fed-funds futures, a popular tool for traders to bet on U.S. interest-rate policy, show a 99% probability that the Fed lifts rates this month, according to data from CME Group. Investors see only a 6% chance that rates rise again in February.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

December 01, 2016 11:07 ET (16:07 GMT)

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