The dollar is losing ground against all of its major competitors on Thursday. The weakness in the currency stems from investor concerns that the Federal Reserve will scale down its stimulus program if labor market improves.
Some members of the Federal Reserve favor scaling back the central bank's $85 billion a month asset purchase program this summer as long as the economy continues to improve, according the minutes of the Fed's April 30-May 1 meeting.
"A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome," the minutes showed.
In prepared remarks before the Joint Economic Committee of Congress on Wednesday, Bernanke seemed supportive of leaving monetary policy unchanged in the near future. The Fed chief told the committee that a premature tightening of monetary policy carries a substantial risk of slowing or ending the economic recovery.
However, Bernanke later acknowledged that upbeat economic data could lead the Fed to scale back its asset purchase program in the next few meetings.
The dollar has pulled back from an early high of $1.2820 against the Euro on Thursday, to around $1.2940.
Consumer sentiment in the euro area increased for the sixth consecutive month in May to its strongest level since the middle of last year, preliminary data from the European Commission showed Thursday.
The DG ECFIN flash estimate of the consumer confidence indicator for Eurozone came in at -21.9, up from April's final score of -22.3. Economists were looking for a score of -21.8 for May. The latest reading is the highest since July last year, when the figure was -21.3.
An indicator of Eurozone's private sector activity improved more than expected in May, renewing hopes that the economy is inching towards a recovery. Nonetheless, the indicator remained in negative territory, signaling sharp deterioration in overall business activity.
The composite output index, which measures the performance of the both manufacturing and service sectors, rose to a three-month high of 47.7 in May from 46.9 in April, flash results of a survey by Markit Economics showed Thursday.
Germany's private sector activity improved from a five-month low, but remained marginally below the neutral level, flash survey results from Markit Economics showed Thursday. The composite output index rose to 49.9 in May from a five-month low of 49.2 in April.
The downturn in French private sector output continued in May, flash data from Markit Economics showed Thursday. The composite output index remained unchanged at 44.3 in May.
Germany's leading index continued to climb in March led by the yield spread, stock price index and new orders in investment goods industries components, survey data released by the Conference Board showed on Thursday.
The Conference Board Leading Economic Index for Germany rose 0.3 percent in March to 103.9. The pace of increase was unchanged from February.
The greenback has also retreated from an early high of $1.5032 against the pound sterling Thursday, to around $1.5125.
The U.K. economy avoided recession in the first quarter as initially estimated, but the detailed breakdown of gross domestic product highlighted major contribution coming only from built up stocks of companies.
Gross domestic product grew 0.3 percent sequentially in the first quarter, offsetting the last quarter's 0.3 percent fall, second estimates from the Office for National Statistics showed Thursday. The figure came in line with the estimate released on April 25.
Capital spending by Japanese businesses may continue moderate uptrend in the coming months as companies' profits improve, the Bank of Japan said in its monthly report published on Thursday.
"Business fixed investment is projected to follow a moderate increasing trend, partly due to investment related to disaster prevention and energy, as corporate profits head toward improvement," the central bank said as it revised up its assessment of the economy.
The Bank of Japan on Thursday stepped in to curb excess volatility in long-term bond yields by injecting JPY 2 trillion funds into the system, reports said.
The 10-year Japanese government bond yield jumped to its highest in level in more than one year early Thursday after Federal Reserve Chairman Ben Bernanke's remarks signaled a possible reduction in US monetary stimulus in the coming months.
The buck began Thursday's session around the Y103.560 level against the Japanese Yen, but has since fallen to around Y101.680.
First-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 18th, according to a report released by the Labor Department on Thursday. The report showed that initial jobless claims fell to 340,000, a decrease of 23,000 from the previous week's revised figure of 363,000.
Economists had expected jobless claims to drop to about 345,000 from the 360,000 originally reported for the previous week.
In another upbeat sign for the U.S. housing market, the Commerce Department released a report on Thursday showing that new home sales came in well above economist estimates in the month of April. The report showed that new home sales climbed 2.3 percent to a seasonally adjusted annual rate of 454,000 in April from the revised March rate of 444,000.
Economists had expected new home sales to rise to an annual rate of 425,000 compared to the 417,000 originally reported for the previous month, reflecting a 1.9 percent increase.
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