The greenback rebounded against major currencies as a government report showed fourth-quarter consumer spending increased more than previously estimated. U.S. consumer spending was revised up to an annual pace of 2.3% from a prior estimate of 1.9%. The final estimate for the Federal Reserve's preferred gauge of inflation, which excludes food and energy items, was lowered in the fourth quarter to 2.5% versus the prior estimate was 2.7%.

The U.S. jobless claims fell by 9,000 to 366,000 last week versus the 375,000 claims in the previous week. U.S. final estimate of fourth-quarter gross domestic product showed the economic growth slowed to an annual pace of 0.6 % in forth quarter as expected from a robust 4.9% in the third quarter of 2007.

Interest-rate futures showed a 54% chance that the Fed will cut interest rates by 50 basis points in April. U.S. currency rebounded from 98.56 to 100.17 and from 0.9883 to 0.9990 against the Japanese yen and Swiss franc respectively. The single currency retreated versus the dollar from 1.5848 to 1.5726.

The British pound rallied to 2.0193 on the release of better-than-expected U.K. CBI distribution trade data and then tumbled to 2.0024 on position adjustments in U.S. session ahead of the release of U.K. Nationwide house prices, GDP and current account data on Friday.

China has let the Chinese yuan rise 3.8% this year, ahead of last year's pace, in an effort to contain inflation. The currency rose 0.3% to 7.0116 per dollar on Thursday, the highest since the peg to the dollar was abolished in July 2005.

Friday will see the release of Japan’s CPI, household spending and retail sales, U.S. personal spending and University of Michigan survey.