Dollar falls on return of risk sentiment as US stocks rise to record highs

The greenback fell against majority of its peers on Wednesday as U.S. stocks rallied to record highs, triggering the return of risk sentiment and speculation that the Federal Reserve will begin to taper its asset purchases sooner rather than later. (The Dow ended the day at 35,609, up by 152 points or 0.59%).  
  
Versus the Japanese yen, although the greenback extended its recent ascent and gained to a fresh 3-year peak at 114.69 in Asian morning, lack of follow-through buying triggered profit-taking and the pair fell to session lows at 114.09 in New York morning due partly to active cross-buying in jpy before staging a short-covering rebound.  
  
The single currency traded with a firm bias and gained to 1.1652 ahead of European open before dropping to session lows at 1.1617 in early European morning. The pair then erased its losses and rose to an intra-day high at 1.1658 in New York morning on renewed usd's weakness due to return on risk sentiment.  
  
Reuters reported the European Central Bank should gradually exit its expansionary monetary policy to combat its negative side effects, Belgian central bank chief Pierre Wunsch told Germany's WirtschaftsWoche.    "We know that continued expansionary monetary policy has negative side effects that increase over time," the magazine quoted Wunsch as saying. "I advocate a gradual exit from the current mode."  
  
The British pound met renewed selling at 1.3814 in Asian morning and fell to session lows at 1.3743 ahead of New York open. However, the pair then erased its losses and rallied to an intra-day high at 1.3834 in New York on usd's weakness together with cross-buying of sterling especially vs euro.  
  
Data to be released on Thursday:  
  
U.K. PSNB, PSNCR, CBI trend orders, France business climate, Italy industrial sales, U.S. initial jobless claims, continuing jobless claims, existing home sales, leading index change, Canada ADP employment change, new housing price index and EU consumer confidence.