RTTNews - Following a brutal stretch that saw the dollar plunge to multi-month lows versus most majors, the buck was able to find its footing for a second straight day amid speculation that the bulls may have gotten ahead of themselves in figuring the end to the global recession was just around the bend.

Traders weighed a number of key economic developments from around the world, but were truly hesitant to make any bog moves ahead of Friday's all-important monthly jobs report from the US government.

In the big news from overseas, European Central Bank President Jean-Claude Trichet send Thursday that economic activity in the euro are would decline less in the second half of 2009, following the ECB's decision to retain its current one percent overnight interest rate.

Meanwhile here in the States, first time claims for unemployment benefits showed a modest decrease in the week ended May 30th, according to a report released by the Labor Department, with the report also showing the first decrease in continuing claims in twenty weeks.

The report showed that initial jobless claims fell to 621,000 from the previous week's revised figure of 625,000. Economists had been expecting jobless claims to edge down to 620,000 from the 623,000 originally reported for the previous week.

The Labor Department's monthly jobs report, scheduled for release Friday, is expected to show payrolls shrank by 520,000 in May.

The dollar held its ground against the euro, hopping back and forth between 1.4100 and 1.4200 for most of the day. This was a modest improvement from the 5-month low of 1.4338 set earlier in the week.

As a gesture to those concerned that the ECB may risk snuffing out expansion by firming up monetary policy too soon, Trichet also said the ECB will start its plan to buy 60 billion euros of covered bonds in the primary and secondary markets next month.

The purchase, which will start in July 2009 and are expected to be fully implemented at the latest by the end of June 2010, will be distributed across the euro area and will be carried out by means of direct purchases, said Trichet.

The dollar managed to firm up for a second day in a row versus the sterling, rising to 1.6150. With the advance, the dollar stayed away from a 6-month low of 1.6662, set earlier this week.

The Bank of England maintained its key interest rate at a historic low as expected and voted to continue with its asset purchase scheme to pull the economy out of deep recession.

At the end of two-day rate setting meeting, the Monetary Policy Committee maintained the Bank Rate at 0.5%, the lowest since the central bank was established in 1694. The previous change in the interest rate was a 50 basis points reduction in March.

Meanwhile, the Bank of Canada on Thursday announced that it is maintaining its target for the overnight rate at 1/4 per cent, as expected. Policymakers in Ottawa also reiterated a conditional commitment to hold current policy rate until the end of the second quarter of 2010.

Crude oil rebounded back above $67, and the dollar drifted lower against the petro-linked loonie. The buck slipped to 1.0950, edging back toward a 7-month low of 1.0782, set a week ago.

On the flip side, the dollar gained a bit versus the yen, rising to 96.70. Overall, the pair has been stuck in the mud, with traders unable to decide which is the least attractive option during a potential economic recovery.

Japanese companies reduced their spending on plant and equipments in the first three months of 2009 as plunging profits forced corporates to cut investment, according to data released Thursday.

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