WORLD FOREX: Dollar Up As Caution Returns Ahead Of Jobs Data

NEW YORK (Dow Jones)-- The dollar recovered for the third straight day against major rivals Thursday from its lowest levels this year.
Investors pared riskier bets in higher-yielding currencies on sinking stocks. Caution also set in ahead of the closely-watched U.S. release of the July non-farm payrolls report.
The pound suffered the most Thursday versus the U.S. unit, after the Bank of England surprised currency markets with a plan to expand its bond-buying program by GBP50 billion, on the heels of a string of positive U.K. data.
From a 2009-high Monday of $1.7041 and an intraday high of $1.7028, the pound fell as low as $1.6753.
However, it remains to be seen whether the pound's shift lower will prove to be a knee-jerk reaction or the start of a sustained move.
"The central bank has again shown a willingness to act to ensure the recovery can gain traction and get inflation back on target in the medium term. This, in turn, should make the market more, not less, confident about recovery and ultimately drive sterling higher," said Daragh Maher, a senior currencies analyst at Calyon in London.
"The BOE has simply provided a better level to start buying sterling afresh," he added.
Thursday afternoon in New York, the euro was at $1.4350 from $1.4415 late Wednesday. The dollar was at Y95.44 from Y94.96. The euro was at Y136.91 from Y136.95. The dollar was at CHF1.0651 from CHF1.0609 late Wednesday. The pound was at $1.6775 from $1.7006.
Meanwhile, the European Central Bank offered little in the way of surprises Thursday, leaving its refinancing rate unchanged, at 1.0%.
ECB President Jean-Claude Trichet said the euro-zone economy was on track for recovery next year and reaffirmed that it would continue to allot all bids for funding placed by commercial banks.
Trichet added that deflationary pressures should begin to ease and consumer prices will rise later this year.
His overall tone contrasted with the fears generated by the BOE, and led to some intraday advances for the euro against the dollar.