By Karen Brettell

NEW YORK (Reuters) -The dollar rose to a six-week high on Thursday as data showed a still-solid U.S. economy before Friday's closely watched jobs report, while safe haven demand on concerns about rising Middle East tensions and the impact of a dockworker strike also boosted the currency.

The greenback has additionally benefited from more dovish central bank expectations being built into currency peers, including the euro, sterling and yen.

Data on Thursday showed that U.S. services sector activity jumped to a 1-1/2-year high in September amid strong growth in new orders, though its measure of services employment fell, consistent with a slowdown in the labor market.

"Today is an example of how quickly the U.S dollar can recover," said Juan Perez, director of trading at Monex USA in Washington. While Thursday's data was "a little contractionary," the U.S. remains the envy of other countries, he said.

Other data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week, but Hurricane Helene's rampage in the U.S. Southeast and strikes at Boeing (NYSE:BA) and ports could distort the labor market picture in the near term.

The dollar index was last up 0.33% at 101.98 and reached 102.09, the highest since Aug. 19. It hit a 14-month low of 100.15 on Sept. 27.

"The dollar has been regaining some ground this week... some of it is just markets trying to navigate a lot of crosscurrents," said Vassili Serebriakov, FX & macro strategist at UBS in New York.

Improving economic data and more hawkish comments from Federal Reserve Chair Jerome Powell on Monday have reduced expectations that the Fed will cut rates by another 50 basis points at its Nov. 6-7 meeting.

Friday’s jobs report for September is the next major U.S. economic release that may sway Fed policy. Economists polled by Reuters expect 140,000 job additions, while the unemployment rate is anticipated to stay steady at 4.2%.

"U.S. data has been a bit firmer, which probably makes the market a little bit more cautious about selling the dollar ahead of the nonfarm payrolls report," Serebriakov said.

Traders are now pricing in a 35% probability of a 50 basis point cut next month, down from 49% a week ago, the CME Group's (NASDAQ:CME) FedWatch Tool shows.

The U.S. currency has benefited from a safety bid since Israel was attacked by Iran on Monday in a strike that raised fears the oil-producing Middle East could be engulfed in a wider conflict.

Oil prices rose on Thursday on concerns that crude oil flows from the region could be disrupted. Asked on Thursday if he would support Israel striking Iran's oil facilities, U.S. President Joe Biden told reporters: "We're discussing that."

Long lines of container ships also appeared outside major U.S. ports on Thursday as the biggest dockworker strike in nearly half a century entered its third day, preventing unloading and threatening shortages of everything from bananas to auto parts.

"The U.S. dollar is a safe haven in the midst of chaos," said Perez. "In the post-pandemic world the number one concern was, can we rebuild healthy supply chain logistics? And this headline news completely destroys that stability and health."

The euro has fallen on increasing expectations that the European Central Bank will cut rates at its Oct. 17 meeting as inflation recedes.

It fell 0.17% to $1.1026 and got as low as $1.1008, the lowest since Sept. 12.

Sterling tumbled after Bank of England Governor Andrew Bailey said that the British central bank could move more aggressively to cut interest rates if inflation pressures continue to weaken.

The British pound was last down 1.15% at $1.3114 and reached $1.3093, the lowest since Sept. 12.

The dollar also hit a six-week high against the yen as Bank of Japan board member Asahi Noguchi said the Japanese central bank must move cautiously and slowly to avoid hurting the economy.

It comes after Prime Minister Shigeru Ishiba said on Wednesday that Japan is not in an environment for an additional rate increase.

The dollar was last up 0.27% at 146.85 and earlier reached 147.25, the highest since Aug. 20.

In cryptocurrencies, bitcoin fell 0.36% to $60,687.91.