The US trade deficit narrowed from $53.1 billion to $44.8 billion in July. The 13.1pct decline was the biggest monthly drop since early 2009. US exports rose 3.6pct while imports eased by 0.2pct in July. The average price for imported oil declined for to US$104.27 a barrel. US jobless claims rose by 2000 to 414,000 in the last week. US consumer credit rose for the second month in a row, up by $11.97 billion in July - showing more of a willingness by consumers to borrow.

The European Central Bank left its key lending rate unchanged at 1.5pct. The ECB staff economic GDP growth projections were revised lower in both 2011 and 2012. ECB President Trichet also indicated that the ECB is now on hold, with risks to inflation “balanced” and no longer to the “upside.

European shares rose for a second session on Thursday ahead of the speech by US President Obama. Short covering supported the modest rally. The European energy sector was the best performer up 2.2pct. The FTSEurofirst index rose 0.8pct, the German Dax gained 0.1pct and the FTSE index rose 0.4pct.

US sharemarkets fell on Thursday after a speech by Federal Reserve Chairman Bernanke confirmed that the Fed was committed to supporting the economy but gave no details of new stimulus measures. Financial stocks which the biggest decliners with the KBW Bank index losing nearly 3pct. However volumes were light as investors waited on President Obama Jobs package. The Dow Jones fell 119pts or 1pct with the S&P 500 down 1.1pct and the Nasdaq fell 20pts or 0.8pct.

US treasuries rallied on Thursday (yields lower) on speculation that the Federal Reserve would soon buy longer term maturities. US 2yr yields fell 2pts to 0.192pct and US 10yr yields fell by 8pts to 1.977pct.

The US dollar strengthened to two-months highs against the Euro after the European Central Bank signalled a pause in its interest rate tightening cycle. The Euro fell from highs near US$1.4090 to lows around US$1.3875, ending trade near US$1.3885. The Aussie dollar fell from highs around US106.60c to US105.60c, ending US trade near US105.70c. And the Japanese yen traded in a tight range between 77.15 yen per US dollar to JPY77.55 before ending US trade near JPY77.45.

US crude oil price recovered ground in late trade after the release of the weekly inventory data. US crude oil inventories fell nearly 4 million barrels last week. Nymex crude oil rose by US5c or 0.1pct to US$89.05 a barrel and London Brent crude fell by US1.25 to US$114.55 a barrel.

Base metal prices rallied on the London Metal Exchange on Thursday as the US trade data buoyed prospects in the world´s largest economy. Lead was the standout up 3.1pct. And the gold price rallied with the Comex December gold price up by US$39.50 an ounce or 2.2pct to US$1,857.50.

Ahead: In Australia, no economic data is released. In the US, data on wholesale inventories is released. Chinese economic data is released.