The greenback extended Wednesday's selloff after the release of soft US CPI data and fell to fresh multi-week lows on Thursday before staging a rebounding in New York trading due to a rally in U.S. yields.  
  
Reuters reported the number of Americans filing new claims for unemployment benefits rose for the second straight week, indicating further softening in the labor market despite still tight conditions as the Federal Reserve tries to slow demand to help tame inflation. Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 262,000 for the week ended Aug. 6, the Labor Department said on Thursday. Economists polled by Reuters had forecast 263,000 applications for the latest week.  
  
Versus the Japanese yen, dollar traded with a firm bias and gained to 133.31 in Asian morning. However, price met renewed selling there and dropped to 132.44 in early European morning before falling to an intra-day low at 131.74 at New York open on broad-based weakness in usd. The pair then pared its losses and staged a short-covering rebound in tandem with U.S. yields to 133.13.  
  
More from Reuters, U.S. producer prices unexpectedly fell in July amid a drop in the cost for energy products, and underlying producer inflation appears to be on a downward trend. The producer price index for final demand declined 0.5% last month after climbing 1.0% in June, the Labor Department said on Thursday. In the 12 months through July, the PPI increased 9.8% after advancing 11.3% in June. There was a drop of 1.8% in goods prices. They gained 2.3% in June.  
  
The single currency remained under pressure in Asia and fell to session lows at 1.0276 ahead of European open. The pair then erased its losses and rallied to an intra-day high at 1.0365 in New York morning on usd's weakness together with cross-buying of euro especially vs sterling before easing.  
  
The British pound fell to 1.2183 in Asian morning before rising to 1.2246 in European morning. The pair then briefly retreated to 1.2195 in Europe before rising to an intra-day high at 1.2249 in New York morning on usd's weakness. Cable then retreated sharply to 1.2186 on profit-taking before stabilising.  
  
Data to be released on Friday:  
  
New Zealand manufacturing PMI, food price index, France ILO unemployment rate, U.K. GDP, industrial output, manufacturing output, construction output, trade balance, NIESR GDP estimate, France CPI, Italy trade balance, EU industrial production, Germany current account, U.S. import prices, export prices and University of Michigan sentiment.  

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