NEW YORK (MarketWatch) -- The dollar held ground versus the euro Thursday as the European Central Bank gave a more positive economic outlook, and released further details about its bond-purchasing program.
The British pound fell versus the U.S. currency after the Bank of England kept its target interest rates unchanged.
The dollar index , which measures the performance of the greenback against a basket of currencies, rose to 79.595, from 79.499 in late North American trading Wednesday.
The euro bought $1.4140, paring an easier slide to be barely changed from $1.4143. The pound gained 0.7% on the day to $1.6408.
The European Central Bank left its key lending rate unchanged at 1%. See more on ECB, BoE rates.
CUR_EURUSD 1.41, +0.00, +0.01%
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ECB President Jean-Claude Trichet said the bank will begin purchases of covered bonds in July and fully implement the 60-billion-euro plan by June 2010. See full story.
In his press conference, Trichet also said the contraction in the region's economy will slow and that the current interest rates are appropriate.
The central bank's staff lowered its 2009 inflation forecast.
Trichet's comments "support our view that the refi rate has bottomed and that the central bank is getting more and more optimistic on the growth outlook," analysts at Action Economics said.
Traders were also tuned in to whether European unease over the euro's recent rise above the $1.40 mark against the dollar could be enough to prompt Trichet to shake his usual reluctance to comment on foreign-exchange rates, Lloyds strategists said.
The U.S. dollar also gained some support from economic data showing some improvement in jobless claims and first-quarter productivity. See more on jobless claims.
U.K., Canada, Japan
The Bank of England also left its benchmark borrowing rate unchanged Thursday, at 0.5%, and offered no further adjustment to its 125-billion-pound ($205 billion) plan to purchase government bonds and other assets.
The British pound fell to $1.6220, compared with $1.6316 late Wednesday.Meanwhile, data compiled by mortgage lender Halifax showed British house prices posted an unexpected 2.6% monthly increase in May. See full story.
Also sharing the spotlight, the Bank of Canada opted to keep its overnight rate at 0.25%.
The Canadian dollar stayed higher versus the greenback, trading at C$1.1083 per U.S. dollar, from $1.1106 Wednesday.
Against the Japanese currency, the dollar rose to 96.58 yen, up from 95.87 yen late Wednesday.
Economists at Brown Brothers Harriman said the yen was pressured after data showed first-quarter Japanese capital spending posted the largest drop in 54 years.
The government said Japanese investors bought nearly a trillion yen more foreign bonds than they sold last week.
Capital spending fell 25.3% in the January-March period from the year-earlier quarter, Ministry of Finance data showed. Recurring profits dropped 69%.
