By Hannah Lang

WASHINGTON, Dec 29 (Reuters) - The dollar slipped on Thursday with investors on edge at the end of the year as initial optimism over China's reopening fizzled out and as markets processed a readout of U.S. jobless claims.

Markets are weighing the impact of China's rapid loosening of its strict COVID-19 rules with a surge in new infections.

"China is one of the keys I think to 2023 and what happens to the global economy," said Chris Gaffney, president of world markets at TIAA Bank.

Following China's removal of its quarantine rule for inbound travelers from Jan. 8, the United States, Japan, India and other countries said they would require COVID tests for travelers from China.

"If they can bounce back from the dramatic slowdowns that we've seen, that helps the overall growth on the global scale, but on the other hand, it could also lead to higher energy demand and more demand means higher prices," said Gaffney.

After hitting a one-week high against the yen on Wednesday, which saw the dollar touch 134.40, the greenback hit a session low against the yen on Thursday. The dollar JPY=EBS last fell 1.1% against the yen to 133.005.

The dollar also fell against the Swiss franc CHF= to as low as 0.9208, the lowest level since March 31. It was last down 0.71% against the Swiss franc at 0.922.

Against a basket of currencies, the U.S. dollar index =USD fell 0.479% to 103.840, having climbed 0.18% in the previous session.

That drop may have been a reaction to fresh U.S. jobless claims numbers on Thursday, said Steve Englander, head of G10 FX research at Standard Chartered.

The Labor Department found that the number of people receiving benefits after an initial week of aid rose to 1.710 million in the week ending Dec. 17. Those so-called continuing claims, a proxy for hiring, have drifted higher since early October.

"Historically, when you have that pace of increasing continuing claims, it's been an early signal of a downturn," said Steve Englander, head of G10 FX research at Standard Chartered.

But analysts warned against reading too much into price moves amid low trading volumes as markets head into the new year.

"It's the end of the year and there are liquidity issues and so on, so the market may be reacting more to incoming data than it would under normal liquidity circumstances," said Englander.

Investors are likely eager for the fresh information that 2023 will bring, said Craig Erlam, markets analyst at currency platform Oanda.

"We very much appear to be in drifting mode, awaiting the turn of the year when traders return and we can get the latest thoughts from policymakers and the most up-to-date data," he said.

Sterling GBP=D3 rose 0.42% against the dollar to 1.207 after slipping 0.11% the previous day.

The aussie AUD=D3 rose 0.70% versus the greenback at $0.678, while the kiwi rose 0.68% against the dollar at $0.635.

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Currency bid prices at 2:12PM (1912 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

103.8400

104.3500

-0.48%

8.548%

+104.4500 +103.7700 Euro/Dollar

EUR=EBS

$1.0677

$1.0613

+0.63%

-6.07%

+$1.0690

+$1.0612 Dollar/Yen

JPY=EBS

132.9750

134.4850

-1.10%

+15.54%

+134.3800 +132.9100 Euro/Yen

EURJPY=

142.00

142.69

-0.48%

+8.96%

+142.6800 +141.6000 Dollar/Swiss

CHF=EBS

0.9222

0.9294

-0.76%

+1.11%

+0.9287

+0.9211 Sterling/Dollar GBP=D3

$1.2070

$1.2018

+0.42%

-10.77%

+$1.2078

+$1.2017 Dollar/Canadian CAD=D3

1.3544

1.3608

-0.47%

+7.12%

+1.3607

+1.3541 Aussie/Dollar

AUD=D3

$0.6782

$0.6740

+0.65%

-6.67%

+$0.6785

+$0.6710 Euro/Swiss

EURCHF=

0.9846

0.9856

-0.10%

-5.04%

+0.9864

+0.9825 Euro/Sterling

EURGBP=

0.8845

0.8831

+0.16%

+5.30%

+0.8860

+0.8823 NZ

NZD=D3

$0.6352

$0.6310

+0.68%

-7.18%

+$0.6357

+$0.6299 Dollar/Dollar

Dollar/Norway

NOK=D3

9.8650

9.8995

-0.25%

+12.09%

+9.9155

+9.8750 Euro/Norway

EURNOK=

10.5367

10.4969

+0.38%

+5.23%

+10.5599

+10.4999 Dollar/Sweden

SEK=

10.4431

10.4788

+0.35%

+15.80%

+10.4915

+10.4250 Euro/Sweden

EURSEK=

11.1514

11.1123

+0.35%

+8.96%

+11.1630

+11.1145

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World FX rates Link

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Reporting by Hannah Lang in Washington; Additional reporting by Harry Roberston in London and Rae Wee;
Editing by Bradley Perrett, Stephen Coates, Andrew Heavens, Nick Macfie anad Alison Williams