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Investing.com – The dollar trimmed losses against the other major currencies on Wednesday, inching its way back toward recent 12-year highs as investors turned their attention to the European Central Bank’s upcoming policy meeting on Thursday.

Earlier Wednesday, the U.S. Commerce Department said that the number of building permits issued last month decreased by 1.9% to 1.032 million units from November’s total of 1.052 million.

Analysts expected building permits to rise by 1.3% to 1.055 million units in December.

The report also showed that U.S. housing starts rose by 4.4% last month to hit 1.089 million units from November’s total of 1.043 million units, compared to expectations for a reading of 1.040 million.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, pulled away from four-day lows of 92.36 hit earlier in the session and conslidated at 93.16, moving closer to Friday’s 12-year peak of 93.56.

EUR/USD was up 0.27% to 1.1585, holding above Friday’s 11-year lows of 1.1459.

Sentiment on the single currency remained vulnerable as investors waited to see if the European Central Bank would embark on an outright quantitative easing program on Thursday.

USD/JPY dropped 0.93% to 117.72, pulling back from the previous session’s one-week highs of 118.89 after the Bank of Japan maintained the size of its stimulus program and reiterated its pledge to increase base money at an annual pace of ¥80 trillion through buying government bonds and risk assets.

The central bank also cut its core inflation forecast 1% from 1.7% three months ago.

Elsewhere, the pound remained lower against the dollar, with GBP/USD slipping 0.20% to 1.5112, re-approaching a recent 18-month trough of 1.5032.

Sterling shrugged off a report by the Office for National Statistics showing that the U.K. unemployment rate dipped to 5.8% in the three months to November from 6.0% in the previous three month-period and better than expectations for a reading of 5.9%.

The report also showed that the claimant count fell by 29,700 last month, compared to expectations for a decline of 25,000 people.

Separately, the minutes of the Bank of England’s January policy meeting showed that members voted unanimously to keep the asset puschase facility program on hold. Members also voted unanimously for the first time in five months to keep interest rates unchanged at a record-low 0.5%.

Meanwhile, USD/CHF plummeted 1.59% to trade at 0.8615.

The commodity-linked currencies turned broadly lower. AUD/USD slid 0.29% to 0.8145 and NZD/USD shed 0.30% to 0.7617, while USD/CAD rallied 1.55% to fresh five-and-a-half year highs at 1.2297.

The loonie weakened broadly after the Bank of Canada unexpectedly lowered its overnight target rate to 0.75% from 1.0% previously, saying that the rout in oil prices over the past six months would be negative for growth and underlying inflation in Canada.

The BoC said it now expects economic growth to slow to about 1.5% and the output gap to widen in the first half of 2015. Inflation is also expected to fall below the bank’s target during the coming year, before moving higher again in 2016.

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