You could very well be be right Babaoriley as we have all seen enough manipulation and media spin over the last couple of years to ensure that anything is possible. However, currency traders have been conditioned over the past few years to prioritize interest rate differential as a key item when evaluating currencies rather than fundamentals. So if the ECB raises tomorrow, the interest rate differential will move much in favour of the Euro and not the USD. This will contrast the FED's rate freeze last week and emphasize just how handcuffed the FED is as opposed to the more flexible ECB. Currency traders will also likely realize that Gentle Ben used up his last ace by jawboning the USD higher recently with only moderate and temporary success. On the other hand, if the ECB raises tomorrow, their credibility will rise significantly compared to the "all-talk" FED. In the world of banking, credibility and perception are vital for successful existence.

Also, Jean-Claude Trichet may be French but most traders realize that the real power behind the ECB is Germany and their Bundesbank President Axel Weber. From past history, the Germans are not known for talk or bluffing action but almost always keep to their plans. Therefore, Trichet's recent rhetoric of excessive inflation will most likely be dealt with German style, i.e. real action.

Now should the ECB hold rates steady tomorrow, ECB credibility will be shaken considerably and the euro will fall accordingly. This should strengthen the USD initially but currency traders will realize within a few days that all central bank activity is bogus and we should see a move away from all paper currencies and into hard currencies, i.e. gold and silver. So even if the ECB holds tomorrow, gold will still see an upward move but more in the medium term.

With the credibility of most central banks reaching all-time lows this year, now would not be an appropriate time for the ECB to jawbone. In fact, I am sure they will seize the opportunity to wrestle dominance away from the FED, which is something they lost after WWII.

Due to Hank flying to Europe earlier this week to meet with Trichet and Weber, one can be assured he was not conducting these last minute visits to collect donations for the United Way. Hank most likely knew the ECB rate hike was baked in but was most likely there trying to soften the ECB's follow-up statement. For if the ECB raises interest rates and releases a hawkish statement tomorrow, adios USD.

As Ralph Nader was quoted as saying today: "Consider the U.S. dollar like an elastic band. You can keep stretching this rubber band but suddenly it BREAKS."

All the best - VHF