NEW YORK (MarketWatch) -- The dollar edged down 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 dollar index (DXY 79.28, -0.22, -0.28%) , which measures the performance of the greenback against a basket of currencies, slipped to 79.252 from 79.499 in late North American trading Wednesday.
The euro bought $1.4188, up from $1.4143 the prior evening.
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.
The greenback also gained against the British pound after the Bank of England met. Though it kept its target interest rates unchanged, economists still think the Monetary Policy Committee could expand its debt-purchases program, which weighed on sterling.
Supporting the euro, the European Central Bank left its key lending rate unchanged at a record low of 1%. See more on ECB, U.K. rates.
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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.
The euro responded positively to the announcement because "Trichet did not feel that it was necessary to increase the size and scope of the program because he believes that the stimulus will provide positive risks for the Eurozone economy," Kathy Lien, director of currency research at Global Forex Trading in New York, said in emailed comments.
Trichet also noted the purchases will be automatically sterilized, limiting the impact on the currency, Lien said.
In his press conference, Trichet also said current interest rates are appropriate.
The central bank's staff slashed its economic-growth forecasts for this year and 2010, though kept open the possibility of a rebound next year. It also 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.
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 $1.6216, compared with $1.6316 late Wednesday.
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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$1.1010 per U.S. dollar, from $1.1106 Wednesday.
Against the Japanese currency, the dollar rose to 96.38 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%.
