The dollar rose sharply versus the yen and held its ground against most other major currencies Thursday morning in New York as global equities rallied on signs of light on the economic horizon.

Investors worldwide have cheered a number of better-than-expected corporate earnings reports and found encouraging elements in yesterday's US GDP data.

GDP decreased at an annual rate of 6.1 percent in the first quarter, better than the 6.3 percent drop in the previous quarter, but considerably worse than the 4.7 percent decline economists had anticipated.

A steep drop in private inventories played a big part in the sharper than expected contraction in GDP, however, with the drop in inventories subtracting 2.8 percentage points from first quarter GDP.

Economic data is likely to attract some attention on Thursday, with reports on weekly jobless claims, personal income and spending, and Chicago-area manufacturing activity among those scheduled to be released.

The dollar surged higher versus the yen Thursday morning as investors reacted to the latest interest rate decision from the Bank of Japan. The buck jumped a weekly high of 98.20, edging closer to a multi-month high of 101.43 set earlier in April.

Thursday, the Bank of Japan retained its key interest rate as expected and downgraded its economic outlook. The Policy Board of the central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1%.

Back in the US on Wednesday, the Federal Reserve issued a somewhat more upbeat economic outlook while holding steady on interest rates.

The dollar was able to stabilize versus the euro after hitting a 2-week of 1.3387 overnight. The buck firmed up to 1.3278 by mid-morning, paring a fraction of this week's big losses.

Eurozone annual inflation stood at 0.6% in April, the same as in March, a flash estimate issued by the statistical office Eurostat showed Thursday. This was the lowest rate since the launch of euro ten years ago.

Eurozone's jobless rate stood at 8.9% in March, up from 8.7% in the previous month. The February jobless rate was revised from 8.5% reported initially. Economists were looking for a rate of 8.7%. A year ago, the jobless rate was 7.2%.

Similar to its performance versus the sterling, the dollar managed to improve after hitting a 2-week low in overnight dealing. The buck dropped to 1.4950 before improving by more than a penny. The pair has been range-bound between 1.4400 and 1.5100 in April.

UK house prices resumed their decline in April after showing an unexpected increase in March, the latest report from the Nationwide building society said Thursday.

House prices dropped 0.4% month-on-month in April, indicating that March's 0.9% increase was a blip in a downward trend.

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