The greenback weakened against G7 currencies yesterday as report showed sales of U.S. new homes unexpectedly fell last month, raising concern that the U.S. recovery may be fragile. U.S. new home sales fell by 11.3% to a seven-month low of 0.355 million in November, denting optimism about the economy. Trading was very light with Tokyo closed for a national holiday. Many traders had already wound down their existing positions for the upcoming Christmas holidays (Japan is opened on 25th )and year-end.

U.S. Treasury official said treasury is considering using $30 billion in TARP funds for small business lending program. The single currency rebounded on active pre-holiday short-covering from European low of 1.4234 and price rallied to as high as 1.4366 in NY afternoon before stabilizing.

BOE Minutes of the Dec. 9-10 meeting showed all nine members of Monetary Policy Committee voted to keep interest rates at a record low of 0.5% and maintain the 200 billion pound asset buying programme in December. Policy makers expected growth to return in the fourth quarter of this year. After the news, cable rebounded from European low of 1.5924 to 1.5995 in NY before retreat due to profit-taking.

The greenback declined against the yen in thin pre-holiday trading. The pair hit intra-day high of 91.88 in European morning but was unale to penetrate previous day's high of 91.88 and retreated to 91.33 in NY morning before rebound. In other news, China's central bank affirmed it will maintain an appropriately loose monetary policy next year.

Australian dollar, New Zealand dollar and Canadian dollar (together known as the commodity currencies) all rose against the greenback on Wednesday as crude oil advanced and gold staged a recovery after recent steep fall. All three pairs hit their highs of 0.8818, 0.7065 and 1.0470 respectively against the usd in NY afternoon.

Data to be released on Thursday include Japan BOJ minutes, U.S. durable goods and jobless claims. Thursday will be a market holiday in Germany.