Greenback loses ground, as markets digest news ECB will no longer accept Greek bonds

On Thursday the dollar dropped against the other major currencies, as market sentiment recovered from news the European Central Bank will no longer accept Greek government bonds from banks seeking funding and investors eyed U.S. data due later in the day.

Investing's U.S. dollar index was down 0.56% to 94.05.

EUR/USD climbed 0.81% to 1.1435, pulling away from session lows of 1.1304.

Late Wednesday, the ECB said it would no longer accept Greek bonds as collateral for lending, shifting the burden on to Greece’s central bank to provide additional liquidity for its lenders and increasing pressure on Athens.

The decision came after Greece's new finance minister Yanis Varoufakis said the ECB would do "whatever it takes" to support member states such as Greece following a meeting with ECB President Mario Draghi.

Greece’s government is seeking debt relief on its current €240 billion bailout, which has fuelled fears over a clash with its creditors that could bring about its eventual exit from the euro zone.

Earlier today, data showed that German factory orders rose 4.2% in December, exceeding expectations for a 1.5% gain, after a 2.4% fall in November.

The pound sterling was higher against the dollar, with GBP/USD up 0.43% to 1.5245.

Earlier, industry data showed that U.K. house price inflation rose 2.0% in January, beating expectations for a 0.1% uptick. December's figure was revised to a 1.1% increase from a previously estimated 0.9% gain.

House prices in January were 8.5% higher than the same month a year earlier, above forecasts for a 7.8% gain and after an increase of 7.8% in December.

Elsewhere, USD/CHF rose 0.31% to trade at 0.9292, while USD/JPY edged up 0.13% to 117.43.

The loonie gained, with USD/CAD sliding 0.45% to 1.2515.

The Aussie and Kiwi dollars were higher, with AUD/USD gaining 0.85% to 0.7817 and NZD/USD up 0.33% to 0.7391.

Earlier, the Australian Bureau of Statistics reported that retail sales rose 0.2% in December, disappointing expectations for an increase of 0.4%, after a 0.1% uptick the previous month.

A separate report showed that Australia's new home sales declined 1.9% in December, after a 2.2% rise in November.

Later in the day, the U.S. was to produce its weekly report on initial jobless claims in addition to data on the trade balance.