* 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. the U.S. economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation. 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. 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. 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 . 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 . cryptocurrencies, ether traded around $3,500 after reaching a record high of $3,559.97 on Tuesday, skyrocketing nearly 800% this month ETH= .
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
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