Dollar ends lower on return of risk sentiment

The greenback ended the day lower against majority of its peers on Thursday as a rise in U.S. yields together with a rally in U.S. stocks triggered the return of risk sentiment.  
  
Reuters reported the number of Americans filing new claims for unemployment benefits fell last week, consistent with a labor market that remains tight amid strong demand for workers despite rising interest rates and tightening financial conditions. Initial claims for state unemployment benefits decreased 8,000 to a seasonally adjusted 210,000 for the week ended May 21, the Labor Department said on Thursday. The decline partially unwound some of the prior week's surge, which had pushed claims to their highest level since January. In a separate report on Thursday, the Commerce Department confirmed the economy contracted in the first quarter under the weight of a record trade deficit and a slightly slower pace of inventory accumulation compared to the fourth quarter. Gross domestic product fell at a 1.5 annualized rate last quarter, the government said in its second GDP estimate. That was revised down from the 1.4% pace of decline reported in April. The economy grew at a robust 6.9% pace in the fourth quarter.  
  
Versus the Japanese yen, dollar met renewed selling at 127.58 in Asian morning and tumbled to an intra-day low at 126.56 in early European morning on hawkish comments from BoJ's Kuroda. The pair then pared its losses and rebounded strongly in tandem with U.S. yields to 127.42 in New York before stabilising.  
  
More from Reuters, Bank of Japan Governor Haruhiko Kuroda said on Thursday the central bank can execute a smooth exit from its ultra-loose monetary policy, when the time is right to do so."The BOJ can combine various means and ensure markets remain stable in executing a smooth exit from easy policy. I must add, however, that it won't be easy," Kuroda told parliament.  
  
The single currency retreated from 1.0706 at Asian open to session lows at 1.0663 at European open. The pair then jumped in European morning to an 1.0729 in New York morning before ratcheting higher to session highs of 1.0731 due to a rally in U.S. stocks together with cross-buying of euro especially vs sterling.  
  
The British pound retreated in tandem with euro from 1.2612 at Asian open to 1.2551 (Reuters) ahead of European open. Cable then rallied to an intra-day high at 1.2620 in European morning and despite weakening to 1.2553 in New York morning, price rebounded strongly in New York afternoon on renewed usd's weakness due to rally in U.S. stock.  
  
Data to be released on Friday:  

Japan Tokyo CPI, Australia retail sales, Italy trade balance, U.S. personal income, personal spending, PCE price index, goods trade balance, wholesale inventories, University of Michigan sentiment and Canada budget balance.