Versus the Japanese yen, despite dollar's retreat to 87.63 on profit-taking after Tuesday's rally from 86.83 to 87.98, the greenback rebounded and rose briefly to an intra-day high of 88.12 on active cross-selling in yen in European morning. However, selling interest at there (from Japanese exporters) capped its upside and the pair then dropped to 87.43 in NY morning after the release of weaker-than-expected U.S. durable goods orders, which added worries over U.S. economic outlook. Although dollar managed to recover to 87.72, the pair dropped again and extended its weakness after the release of U.S. Fed's Beige book, as it stated U.S. economic activity continued to increase but not robustly and some districts reported slowing economy, which sparked risk aversion. The pair eventually hit an intra-day low of 87.25 in late NY trading session.

New orders for durable goods fell for a straight month in June, recording their largest decline since August. U.S. durable goods orders dropped by 1.0%, much worse than the estimate of 1.0% increase.

In other news, BOJ's policy board member Hidetoshi Kamezaki expressed a cautious view and said Japan is not yet in a strong recovery led by domestic demand. He added he will not decide policy with forex level in mind and yen rise will push down exports for short term.

Although the single currency rose from 1.2967 in Asian morning after Tuesday's sharp fall from a 10-week high of 1.3047 to 1.2952 and ratcheted higher to an intra-day high of 1.3043 in European morning. Despite euro's choppy trading in NY morning, the single currency then retreated to 1.2969 in NY afternoon after the release of Fed's Beige book and staged a recovery.

Although the British pound rose from 1.5563 in Asia after Tuesday's rally from 1.5441 to 1.5600 and climbed to 1.5627 in European morning, sterling then fell sharply and briefly to an intra-day low of 1.5545 on dovish comments by BoE Governor Mervyn King. Later, the pound rebounded and rose again to a five-month high of 1.5638 on cross buying in sterling versus euro in NY morning, however, cable retreated from there on long liquidation in late NY trading session.

BoE Governor Mervyn King said in his testimony that Q2 GDP growth was encouraging but must be careful not to read too much into one number and he is not certain that U.K. recovery will be sustained. He added the central bank was focusing on the appropriate degree of stimulus, not applying brake on it.

The Australian dollar tumbled against dollar from 0.9025 to 0.8908 after the release of Australian Q2 CPI, which came in at 0.6% q/q and 3.1% y/y, lower than the expectations of 1.0% and 3.4%, raising speculation that RBA will keep its interest rate unchanged.

On Thursday, the Reserve Bank of New Zealand lifted the official cash rate by 25 basis points to 3.0% , in line with market expectations but the official statements came with a distinctly dovish tone, making the size and the timing of future rate hikes uncertain. Nzd/usd fell sharply after RBNZ's rate decision and statements.

Economic data to be released on Thursday include: New Zealand Trade balance (nzd), Imports, Exports, Japan Retail sales, U.K. Nationwide hse price, Germany Unemployment change, Unemployment rate, EU Economic sentiment , Consumer Confidence , Business climate, U.S. Jobless claims, Fed's Fisher speaks, Canada PPI.