Friday 9th May

The Euro is holding firm against the US dollar and comfortably above its recent lows as reduced expectations of ECB rate cuts hit home. No change in interest rates yesterday from both the ECB and B of E with ECB's Trichet warning that inflation remains his top concern even as risks to Euro Zone growth continue to concern.

The Euro was looking under pressure prior to Trichet's post meeting press conference as the FX market focussed on the FT article that claimed European and US officials wanted the dollar to strengthen. Indeed yesterday US Treasury secretary Paulson repeated his strong dollar' mantra and claimed that the credit crisis was now nearer the end than the beginning.

We still remain wary about the state of the US consumer and will not rule out further bad economic news. But we trade a model and that model must be traded with respect and money management!