European currencies fell early on Wednesday after the U.S. Federal Reserve’s measures to put economic recovery back on track failed to impress investors.

The dollar was mostly lower Thursday, losing ground as the euro got a boost from unexpectedly strong PMI economic data.

Markets are giving reversed signals since yesterday. We saw investors rushing for the dollar early on Wednesday then selling it back later on the same day.

During the previous weeks we have seen series of positive economic data releases which have led to put some optimism in the investors’ trading strategies.

Despite the economic growth and improvements that are seen in the releases of the U.S. Official data for weeks, the Federal Reserve is still expected to be holding interest rates near zero for an extended period.

The Reserve Bank of Australia surprised markets Tuesday by holding its policy rate unchanged at 3.75% after a string of increases at its previous three meetings. The decision is considered being a pause in the tightening cycle, with the bank taking a breather to gauge the impact of the 75 basis points in total tightening from October to December of 2009

Without many major economic data on the calendar, the dollar advanced on the Australian dollar and other high-yielding currencies Tuesday but turned lower against the euro, after the People’s Bank of China said it would require banks to hold more cash in reserve as it attempts to restrain credit growth.

Today the economic calendar has witnessed some remarkable Chinese indicators which insured the recovery of the Chinese economy and the effectiveness of its $585 billion stimulus package. The nation released nine key economic data for November.

The euro zone’s ECB released its monthly report for November; revising upwards economic growth for this year and 2010 from the previous predictions in August that inflation will rebound in the upcoming months, while assuring that current interest rates of 1.00% are appropriate.

By Masayuki Kitano
TOKYO, Oct 22 (Reuters) - The dollar bounced off a 14-month low against a basket of currencies and the Australian dollar eased on Thursday as investors locked in profits after Chinese economic data offered no major surprise.