The euro firmed a touch on Thursday ahead of a policy decision from the European Central Bank (ECB) where traders consider a rate cut all but certain, while the dollar eased on renewed bets of a U.S. Federal Reserve easing cycle expected this year.

The Canadian dollar edged slightly higher, trimming some losses from the previous session, after the Bank of Canada became the first G7 country to cut its key policy interest rate as widely expected. It was last at C$1.3687 per dollar.

The euro gained 0.07% to $1.0876, as traders looked ahead to the ECB meeting later in the global day for guidance on the bank's rate outlook.

While policymakers have telegraphed an intention to lower borrowing costs this month, they have remained reticent on how soon subsequent cuts could come.

In the broader market, the U.S. dollar was on the back foot, weighed in part by easing labour market conditions in the United States which added to the case for Fed rate cuts this year.

Markets have priced in nearly 50 basis points of Fed rate cuts this year, with the first expected to come in September.

Data on Wednesday showed the U.S. services sector switched back into growth mode in May after a short-lived contraction the month before, though details of the survey pointed to employment remaining in contraction territory.

Against the U.S. dollar, the kiwi touched a three-month top of $0.6201, while sterling rose 0.09% to $1.2800 and the Aussie edged 0.25% higher to $0.6664.

The dollar index eased 0.14% to 104.10.

The yen nursed some of its losses from the previous session and rose 0.4% to 155.50 per dollar.

The Japanese currency had a brief rally earlier in the week following turbulence in emerging markets owing to political worries, which sent investors unwinding positions in yen-funded carry trades.

Source : Reuters