* Dollar lower, risk sentiment improves on firmer stocks
* U.S. continuing jobless claims fell, lifting dollar/yen
* IMF says euro exchange rate somewhat on "strong side"
* Investors await US GDP figures on Friday
(Adds quote, details, updates prices)
By Wanfeng Zhou
NEW YORK, July 30 (Reuters) - The U.S. dollar fell against
major currencies on Thursday as a sharp rally in world stock
and commodity markets on optimism about the global economy
eroded safe-haven demand for the greenback.
On Wall Street, the Dow industrials <> jumped after a
string of stronger-than-expected corporate results, while
European shares <> closed at their highest level in
nearly nine months and oil prices <CLc1> advanced above $66 a
barrel.
The increase in risk appetite also drove the yen sharply
lower and helped the euro and currencies perceived as
higher-risk recoup some of the previous day's sharp losses.
"The dollar was seeing selling because of the reversal of
the safe-haven (flow) with the rally in stocks," said Chris
Gaffney, vice president at EverBank World Markets, in St.
Louis, Missouri. "The general consensus and feeling in the
markets is that things have bottomed and we're starting to grow
now."
The dollar's losses were limited, however, with many
investors staying on the sidelines ahead of key data on U.S.
gross domestic product for the second quarter on Friday.
The economy is forecast to have contracted by 1.5 percent
in the second quarter after a fall of 5.5 percent in the first
three months of the year, according economists polled by
Reuters. <ECI/US>
"People are looking ahead to (Friday's) GDP data. That
should be a pretty important piece of data for the
recovery/recession debate that seems to be ongoing," said Adam
Fazio, currency strategist at CIBC World Markets in New York.
He said CIBC is looking for "a much worse reading," and
should the GDP data disappoint, the dollar could see "further
strength" as investors look for safe-haven investments.
In midday trading in New York, the ICE Futures U.S. dollar
index, a gauge of the greenback's performance against six major
currencies, fell 0.5 percent to 79.270 <.DXY>. It hit a 2009
low of 78.315 on Tuesday, before staging a strong rebound on
Wednesday.
COMMODITY CURRENCIES RALLY
The euro rose 0.3 percent to $1.4076 <EUR=>, rebounding
from a two-week low near $1.40. The single euro zone currency
briefly pared gains after the International Monetary Fund said
that the euro's exchange rate looks "somewhat on the strong
side relative to its fundamentals."
Based on exchange rate developments from Feb. 25 to March
25, the IMF report said, "estimates place the euro's
overvaluation in a range of 0-15 percent." For story, see
[]
The dollar rose 0.6 percent to 95.64 yen, extending gains
after government data showing a drop in continuing claims
boosted optimism about the U.S. labor market.
The number of U.S. workers filing new claims for jobless
benefits rose slightly more than expected last week, but a
gauge of underlying labor trends fell for a fifth straight
week, the Labor Department said. []
"The continuing claims component was getting better so that
bodes well for the U.S. economy going forward," said Matthew
Strauss, senior currency strategist at RBC Capital Markets in
Toronto. "That has provided support for the dollar against the
yen."
Perceived higher risk and commodity-linked currencies such
as the Australian and Canadian dollars jumped, buoyed by gains
in Chinese shares and a recovery in oil prices.
The Australian dollar gained 1.3 percent to $0.8270 <AUD=>.
The U.S. dollar fell 0.8 percent against the Canadian dollar to
C$1.0816 <CAD=>.
Elsewhere, a survey by Nationwide showing UK house prices
rose 1.3 percent this month boosted sterling, which rose 0.7
percent against the dollar <GBP=> to $1.6493 and hit one-month
high against the euro <EURGBP=>. [].
