EUR

The ECB raised rates by 25 bps to 1.25%, which the JC Trichet later explained as a move intended at anchoring inflation expectations. ONE REASON for the market to expect this rate hike may NOT be followed by subsequent moves is Trichets reference to the negative growth risks resulting from rising inflation. Spoken like a true central banker from the German School (all prev Bundesbank heads), Trichet suggested to start via interest rates to address inflationary expectations, only then for growth to remain in track. Since Trichet indicated todays tightening was not necessarily the first of a series of rate hikes, EURUSD came under pressure, down a full cent from its $1.4349 highs. Markets appetite recedes to the benefit of the $USDX & yen, as yen crosses pull back. GBPUSD also at its session lows. At this point, I continue to see bottom fishing in USDJPY at 84.70s for fresh attempt into 85.50 & 86.30 later into the month.

Ashraf