After drifting lower against its major counterparts in the Asian session on Wednesday, the U.S. dollar recovered gradually and pared some losses as the day progressed.

Traders looked ahead to the upcoming U.S. inflation data, due on Thursday, for clues about the tapering of the asset purchase program by the Federal Reserve.

It is widely felt that any notable surge in consumer price inflation might prompt the Fed to consider discussions on tapering its bond buying program. According to economists, the consumer price inflation is likely to rise to 0.4% on month in May, to an annual rate of 4.7%.

Core CPI is seen at 0.4% on a monthly basis and 3.4% year-on-year.

Data from the Commerce Department showed wholesale inventories in the U.S. rose by 0.8% from a month earlier to US$ 698.0 billion in April, after seeing a 1.2% increase in the previous month.

The dollar index, which dropped to 89.84 in the Asian session, has advanced to 90.17, gaining about 0.11%.

Against the Euro, the dollar has recovered to $1.2179, gaining about 0.05%, after having weakened to $1.2220 earlier in the day.

The European Central Bank is scheduled to announce its monetary policy on Thursday. The ECB is widely expected to hold its policy rates and stimulus measurs unchanged.

Against Pound Sterling, the dollar strengthened to $1.4114 a unit of Sterling, after having weakened to $1.4191 from Tuesday’s close of $1.4154.

The Yen weakened to 109.63 a dollar, easing from 109.49 a dollar.

Against the Aussie, the dollar firmed to 0.7732 from 0.7742. The Swiss franc strengthened a bit to 0.8959 a dollar, gaining from 0.8968.

The Loonie was down slightly against the dollar, at C$1.2112. The Bank of Canada left its key overnight rate unchanged at 0.25%, as expected. The central bank has also kept its quantitative easing program at a target pace of $3 billion per week, following a C$1 billion reduction in the previous meeting.

The bank added that it remains committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved.

The material has been provided by InstaForex Company – www.instaforex.com