FOREX-Dollar falls as risk appetite improves, sterling dips on BoE

* Greenback at lowest in three days
* Aussie dollar falls overnight
* Canadian dollar at 3-1/2-year high
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

(Adds analyst comments, jobless claims data, updates prices)
By John McCrank
New York, May 6 (Reuters) - The dollar dropped to its lowest
point in three days on Thursday as global market risk appetite
improved, while sterling zig-zagged after the Bank of England
slowed the pace of its bond-buying, but left interest rates
unchanged.
Fewer Americans filed new claims for unemployment benefits
last week, data showed, as COVID-19 vaccination efforts and
massive amounts of government stimulus led to a further
reopening of the economy.
While the U.S. economy has been gaining steam, Federal
Reserve speakers on Wednesday downplayed the risks of higher
inflation.
Those statements reinforced "the lower-for-longer mentality
with regards to interest rates," making the greenback less
appealing, said Neil Jones, head of FX sales at Mizuho.
The safehaven U.S. dollar was last down 0.31% at 91.977
against a basket of peer currencies =USD .
"What we've seen early in New York is a little bit of
back-and-forth gyrations, just because of the Bank of England
meeting," said Erik Bregar, director and head of FX strategy at
the Exchange Bank of Canada.
The Bank of England said it would slow the pace of its
bond-buying as it sharply increased its forecast for Britain's
economic growth this year after its coronavirus slump, but it
stressed it was not tightening monetary policy. "They kept their QE target in place but they said they are
going to reduce the weekly pace of purchases, but that's not a
signal and so sterling has kind of gone up and down and done
nothing at the end of the day," Bregar said.
The pound was last down 0.08% against the weaker dollar at
$1.3900 GBP=D3 .
The euro was up 0.47% versus the dollar at $1.2061
EUR=EBS , and up 0.65% against the pound, at 86.88 pence per
euro EURGBP=D3 .
Investors were also paying attention to elections in
Scotland that could herald a political showdown over a new
independence referendum. The Australian dollar fell sharply overnight when China said
it would stop its economic dialogue with Australia, but the
currency had recovered to trade close to flat on the day as
European markets opened AUD=D3 . The Aussie was up 0.1% versus the U.S. dollar at 0.77515 at
1028 GMT, having hit as low of 0.7701 overnight AUD=D3 .
The New Zealand dollar also dropped and was down 0.1% on the
day NZD=D3 .
"The announcements of the formal suspension of the economic
dialogue between China and Australia should not have a lasting
impact on markets given the already strained relationship
between the two ahead of the event," wrote ING strategists in a
note to clients.
The Canadian dollar hit a three-and-a-half year high, helped
by oil price gains and the Bank of Canada's recent shift to more
hawkish guidance CAD=D3 . In cryptocurrencies, ether traded around $3,500 after
reaching a record high of $3,559.97 on Tuesday, skyrocketing
nearly 800% this month ETH= .
Bitcoin BTC=BTSP declined 0.2% to $57,392.75.
The meme-based virtual currency Dogecoin soared on Wednesday
to an all-time high, extending its 2021 rally to become the
fourth-biggest digital coin. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
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