The greenback and yen fell against most of the other major currencies on Wednesday as rising equities worldwide and optimism for the global economies may growth by the fourth quarter this year reduced demand in safe-haven U.S. and Japanese currencies. The dollar index (which measures the dollar’s strength against a basket of six other currencies) dropped 0.70 percent to trade at 84.578 in late New York session, however, dollar rose versus the yen and touched a session high of 98.00 after Federal Reserve said in the Fed statement that the pace of U.S. economic contraction ‘appears to be somewhat slower’.

The single currency rose broadly as risk appetite increased after data showed European confidence in the economic outlook rose for the first time in 11 months in April as inflation slowed and governments boosted spending to combat the recession. An index of executive and consumer sentiment in the 16 nations that use the euro rose to 67.2, the first increase since May 2008. Euro continued to rise broadly on Wednesday and hit session highs of 1.3342, 130.02, 1.5110 and 0.9022 versus the dollar, yen, Swiss franc and British pound respectively before stabilising.

Meanwhile, the New Zealand’s dollar was yesterday’s biggest gainer versus the greenback and yen among major currencies as a report showed the nation’s business confidence rose in April, the most in more than 16 years. In late New York, the New Zealand dollar rose to as high as 0.5778 versus the U.S. dollar and 56.28 against the yen. Other commodity currencies such as Australian dollar and Canadian dollar also benefited from weak U.S. dollar and climbed to session highs of 0.7302 and 1.1190 respectively.

On the data front, the Federal Reserve kept benchmark rate on hold in zero to 0.25 percent range following a two-day meeting on Monetary policy as expected, while a separate report earlier in the day showed U.S. economy plunged again in the first quarter this year with gross domestic product dropped at a 6.1 percent annual pace, weaker than the consensus forecast of a drop of 4.3 percent and compared to a decline of 6.3 percent in the last three months of 2008.

U.S. GDP had fallen for three quarters for the first time since 1974-75 but Wall street equities rose as the contraction was driven by a fall inventories and consumer spending rose 2.2 percent, which suggested that manufacturers and retailers will have to stock up in merchandise. By New York closing, the Dow Jones industrial average index gained 168 points of 2.11 percent to 8,185, while S&P’s 500 index and Nasdaq Composite index climbed 18 points to 873 and 38 points to 1,711 respectively.

Economic data releases on Thursday include Japan manufacturing PMI, industrial production, BOJ rate decision, construction orders and housing starts, Australia NAB business confidence, U.K. Gfk survey and nationwide house prices, German unemployment rate, eurozone CPI, Canada GDP and PPI, and U.S. PCE, weekly jobless claims, personal income, personal spending and Chicago PMI.