The greenback tumbled to a five months low against the euro and a basket of currencies on Wednesday as optimism that the worst of the global financial crisis had passed which dampened the safe-haven demand. In late New York session, the single currency rose to as high as 1.3831 before stabilising, while the ICE future dollar index, which measures the dollar’s strength versus a basket of six other currencies, slid 1.16 percent to trade at 81.143, after dropping to as low as 80.909.

The British pound strengthened versus the dollar and rallied to a seven months high of 1.5795 in New York afternoon session after minutes of Federal Reserve’s latest policy meeting showed the central bank considered increasing purchases of securities. Earlier in the day, the Bank of England policy makers voted unanimously this month to extend their quantitative easing plan by 50 billion pounds ($78 billion) after initially debating whether to increase the program by more to fight the recession.

The Canadian dollar jumped to a multi months high versus the dollar to 1.1363 in late New York session as rising oil and equities prices as well as inflation data that was seen as making it less likely that the Bank of Canada will resort to unconventional measures, or quantitative easing, to stimulate economy. Canada’s consumer price index in April dropped to a 14-year low of 0.4 percent from 1.2 percent in March, while the core inflation rate fell to 1.8 percent from 2.0 percent in March.

Data from Japan showed economy shrank by a record last quarter as exports collapsed and consumers and businesses slashed spending. Gross domestic product fell an annualised 15.2 percent in the three months ended March 31, following a revised fourth- quarter drop of 14.4 percent. The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955.

Economic data releases on Thursday include Japan Tertiary industry index, German Service PMI and Manufacturing PMI, eurozone Service PMI and Manufacturing PMI, U.K. retail sales and PSNCR, Canada wholesale sales, and U.S. weekly jobless claims, leading indicators and Philadelphia Fed survey.