Trichet also said that further rate hikes are warranted should the economic recovery continue. The first half of the year was stronger than anticipated by the central bank and that positive tone seems to have continued into the third quarter.

In contrast, most commentators think the US Federal Reserve has removed its own monetary accommodation following 17 consecutive quarter point increases in the key Fed funds rate to 5.25 percent before the August 8 pause.

That view was cemented by the publication on Wednesday of the minutes to the August 8 meeting, which showed that the Federal Open Market Committee expects below-trend growth to rein in domestic inflation pressures in the months ahead.

The next event that could impact on US rate expectations is today’s US jobs report for August. Wednesday’s survey from the private sector employment agency ADP did little to alter the market consensus for payrolls growth of around 100,000, and is unlikely to prompt the Fed into action.

This could change quickly if today’s jobs report were to come in firm, but, if anything, this week’s drop in consumer confidence and Wednesday’s ADP payrolls estimates have reinforced expectations for a fifth straight month of subdued payroll growth.

Elsewhere, the yen stayed under pressure after weak Japanese industrial production data for July renewed speculation that the Bank of Japan will keep its benchmark rates on hold this year. The Japanese currency is set to record its worst month since March as rate hike expectations have diminished.

Gold and Oil had a second day of gains, rising 1.29 percent to $634.2 and up 0.39 percent to $72.16 respectively.

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