Forex News: Bond futures contracts traded higher as European equity markets tumbled Thursday, although bunds drifted in light volumes ahead of the BOE's decision to leave UK interest rates unchanged at 5.0%. Sharp declines in both French and Italian industrial production were largely ignored. At 1100 GMT, the September bund contract was up 0.04 at 112.24, within a 112.16-112.43 range. Meanwhile, December Euribor was unchanged at 94.90. Weaker-than-expected UK housing data gave gilts and short sterling an early lift. The Halifax house price index fell by 2.0% in June, for a year-on-year decline of 6.1%, the largest annual drop since March 1993. There was minimal market reaction to the BOE rate announcement, which was widely anticipated.
At 1100 GMT, September gilts were up 0.20 at 106.55, in a 106.38-106.68 range, while December short sterling was up 0.045 at 94.095. Ongoing concerns over the health of the U.S. financial sector continues to weigh on equities, increasing risk aversion and weighing on the USD. However, as in previous sessions the lack of fresh drivers has seen the greenback recover some lost ground into the U.S. open. EUR/USD peaked at a fresh 1 week high of 1.5762, USD/JPY headed back toward the day's high of 107.42 while GBP/USD trades mid-range after dropping 1 cent from its 1.9820 high. European stock bourses are off the lows, but still between 0.3% and 1% lower, while oil is holding just above $136/bbl.
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