Forex. Thursday results [E]

On Thursday USD remains in former ranges against main currencies. In the morning it dropped versus the yen as Israel bombed Beirut's international airport in the latest escalation of the conflict in the Middle East. Its the first incursion into Lebanon since 2000 prompted the armed Islamic group Hezbollah to fire rockets at northern Israel that killed at least one person. The yen got an extra support on speculation BOJ will lift its key rate tomorrow for the first time in six years and China may raise rates for the second time in two years this week.
Issued government report today showed inflation in Germany held at a four- month high in June, adding to evidence that the ECB will probably take an increasing rate measures.
ECB July bulletin allow to make the same conclusion. According to this document, EU policy makers continue to exercise a very strong vigilance on prices jitters to contain inflation risks not to become the reality.
The editorial article of the bulletin as a whole repeated the ECB President Jean-Claude Trichet speech on monetary policy, made on the last week.
EU Monetary Affairs Commissioner Joaquin Almunia said benchmark rates hike won't damage EU economy. The economy is strong enough to withstand monetary policy and other different savings measures adopted in a series of countries,'' Almunia stressed. What we're faced with in terms of economic problems has structural causes. Interest rates aren't the reason.''
In the afternoon USD covered some losses.

EUR/USD climbed to $1.2720 and after that fell to $1.2660. Bids placed here caused a little recoil to $1.2700. Day closed $1.2691.
GBP/USD after consolidation in a range $1.8330/70 rose to $1.8420. Offers caused rebound to $1.8270. After that the rate stabilized in a range $1.8380/90. Then the pound continued the growth, as a result it tested $1.8470. Later rate declined to $1.8390, and proceeded gain. Day closed $1.84430/40.
USD/JPY after consolidation in a range Y115.20/50 fell to Y115.00. However, later rate came to session highs, where it closed trades.

The yen is rebounding from its biggest one-day decline in 13 months as Bank of Japan policy makers started a two-day meeting. Many of the BOJ's nine policy board members have determined the economic recovery is self-sustaining, and they will increase interest rates. The yen has risen 2.5% since the Bank of Japan ended on March 9 a policy of increasing borrowing costs.
The yen was also supported as some traders speculated China may raise rates for the second time in 2 years. Central bank adviser Yu Yongding said today China should let the yuan strengthen against the dollar, which may spur gains in the currency of Japan, the nation's largest trading partner.