The Thursday session started with a clear level rise in the risk appetites. The sharp rise of the European stock indices, after similar pattern in Asia, resulted in the sale of the Bucks' against the euro and the pound, but at the same time, the bulk purchase of the yen. However, the result of the day was not typical for the mood pattern – the “green” has strengthened against the pound and the yen, remaining negative as for the euro. It should be noted that sales of the euro to the dollar took place both in the moments of the positive statistics on the U.S. economy and when the unfavourable information appeared. The economic news from the States has not shown much, there have been presented the data on the dynamics of the week employment, where the number of initial applications for the unemployment payments fell more than expected last week. Statistics showed that the primary applications decreased by 21 thousand up to 454 thousand while the analysts expected decline by only 12 thousand. The U.S. consumer lending has demonstrated bad results, the volumes in May have declined more than expected. The households have received the consumer loans by 9.1 billion dollars less than the previous month and the April data is reviewed with a decrease by 14.9 billion, which originally reported on the growth of loans granted to the 1.0 billion dollars. The fall was expected but only by 2.3 billion dollars. Obviously, the situation on the labour market determines being cautious with the costs, which increase the debt burden. The last day of the week, as well as the previous, does not contain much news on the U.S. economy, the expected publication includes only data on the stocks volume at the wholesale stores in May, and the forecast expects an increase by 0.4% compared to the previous month. Taking into account the fact that in other regions the data, able to cause a sharp activity in the market, is not expected, it can be assumed to observe a relatively calm range trading for the current session.

   The single European currency has grown against the dollar at the last session, with the euro is stable throughout the session, the price corrections ended higher than the previous minima. Obviously, the increase in the risk appetites, observed on Thursday, above all, supported the single currency. With the growth of the share prices and the favorable labor market data from Australia, the investors were inspired by the prospect of clarifying the situation in the banking sector of the Euro area by way of bank stress - tests. The main event of the day - the statement of the ECB on the rate decisions and the press conference of Trichet had little influence on the market. The rate remained at the same low level but the optimism of  the ECB Head supported the euro for some time. The data on the EU economy were presented by the statistics on the German economy and were quite ambiguous – the industrial production in May increased much more than predicted in comparison with the previous month. An  increase by 2.6% m / m has been recorded while expected +1.0% m / m, when the April figures were revised upward to +1.2% from the previously announced +0.9% m / m. At the same time, the surplus of the current account of the payment balance of the EU's largest economy in May dropped sharply to $ 2.2 billion euro after 3.11 billion previously. The result of the trade balance also decreased, indicating 10.6 billion after 12.8 billion euro in April. Today's news package includes the data on the June consumer inflation in Germany, which will likely be marked by growth,  0.1% m / m and 0.9% y / y and the data on the industrial production of France and Italy, which projected with the slowdown in growth during the year. The absence of the important information and the Sunday holidays, obviously, somewhat temper the optimism present in the market and trading is likely to leave the price in the ranges.

   The English sterling was unable to hold a leadership position against the dollar at a session on Thursday, which had been held in early trading. The “cable” has come under pressure after it became known that housing prices in the UK continue to fall. Information from the Halifax showed that prices in the housing market fell in June and this was the decline for the third month in a row. The price index recorded - 0.6% m / m, the annual dynamics demonstrated + 6.3% y / y after + 6.9% in May. Expectations were associated with preserving of the June level the same as in May. The situation could not be corrected by the data on the industrial production on the “islands”. As the statistics indicated the industrial production in May rose by 0.7% m / m and 2.6% y / y, while the manufacturing sector showed growth by 0.3% m / m and 4.3% y / y. It was the highest rate of the annual growth for 15 years but the “fly in the ointment” appeared to be the data in the production of the manufacturing industries for last month, which have been revised negative. The April result is further lowered up to - 0.8% m / m and + 3.0% y / y, after the previously announced - 0.4% m / m and +3.4% y / y. The Bank of England has not produced any unexpected actions yesterday, - leaving its key interest rate at the same low level and maintaining the level of the quantitative easing in the amount of 200 billion pounds. Today's news from Britain will talk about the industrial inflation in June. It is assumed that the PPI indexes continued growth - buying and selling prices increased during the month but the annual dynamics clearly slowed down, which confirms the predictions about the weak BOE threat of the price pressure. In addition, the data on the foreign trade in May is to be presented; the forecast expects reduction of the trade deficit up to 3.0 billion from 3.26 billion pounds in April. Obviously, the mutual balancing of these data will determine the continuation of range trade of GBP/USD pair in the wide side way, which has been formed recently.

   The yen declined to bid on Thursday, the appetite for risk led to the total sale of the Japanese currency. The weak statistics on Japan's economy has added pressure on the yen. However, despite the weak results showed in the release of the economic indicators, the Bank of Japan declared a positive assessment of the economic situation in the regions of the country. The quarterly report of the Central Bank on the economic situation showed an increase in the ratings in eight out of nine regions. Today’s news on Japan is not expected, perhaps, optimism will continue to incline investors to higher risks and, accordingly, the sales of the yen. However, the technical factors, which will be manifested as willingness to fix profits at the strong levels of resistance before the Sunday holidays, should be also taken into consideration.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst