Dollar holds advantage as Jerome Powell quashes negative rates, data in focus

Powell spoke in response to a question after offering a sobering assessment of U.S. economic outlook in a closely-watched speech.

The United States and other countries are easing restrictions to allow factories and shops to open again for business, but there are significant risks of a second wave of infections and a full-fledged economic recovery is likely to remain distant until a vaccine for the coronavirus is available.

U.S. data on weekly jobless claims due later Thursday and a survey on U.S. manufacturing due Friday should offer more clues about the economic outlook.

The Australian dollar eased slightly to US$ 0.6449 as traders braced for data at 0130 GMT expected to show a large increase in unemployment (Reuters poll forecast 575,000) due to the coronavirus pandemic, which would bolster expectations for further stimulus measures.

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Across the Tasman Sea, the New Zealand dollar traded at US$ 0.5991. The kiwi tumbled by more than 1% on Wednesday after the Reserve Bank of New Zealand flagged the possibility of negative interest rates.

New Zealand's government is expected to present its budget later today, which will offer fiscal stimulus to offset the economic damage caused by the pandemic. Many investors await China's release on Friday of data on industrial production, retail sales and investment to measure how quickly the world's second-largest economy is recovering from its first contraction in decades in the first quarter.

The novel coronavirus first emerged in China late last year and has since spread across the globe, paralysing economic activity.

Traders in the euro are also focused on the release of preliminary first-quarter gross domestic product data on Friday to assess the scale of the damage caused by the outbreak.