The U.S Dollar held onto modest gains on Thursday, but pared most of its earlier advance as U.S. equities rallied, signaling more willingness among investors to buy riskier assets. The Dollar's earlier gains were triggered overnight by concerns about future Chinese growth. The move came just a day after the U.S. currency sank to a fresh 14-month low against the EUR, which breached the key $1.50 level for the first time since August 2008.
Analysts expect greenback's downtrend to continue, with the Dollar vulnerable on expectations of low rates, a view reinforced after Chicago Federal Reserve President Charles Evans said on Thursday the Fed's focus remained on an accommodative rate policy. The USD is poised for another weekly decline against the currencies of Australia and New Zealand as regional equities extended an earnings-sparked rally in U.S. shares.
The U.S dollar may be set for a 3rd weekly drop against the 16-nation currency before reports today forecast to show improvements in German business confidence and U.S. home sales. Also scheduled are UK 3rd quarter Gross Domestic Product numbers while in the U.S. Federal Reserve chief Ben Bernanke speaks at 12:30 GMT.