The ECB is trying to walk a very fine line between its mandate to control the budding inflationary pressures in the euro-zone and its desire to nurture the nascent economic recovery in the region where the unemployment rates stands at nearly 10%.

The euro has been the victim of an ever widening interest-rate differential to the dollar, a dynamic that has hurt the currency over the past six months as the carry spread now stands at 175 basis points against it.

As oil prices go below $60 per barrel, it should translate to yen strength. I think we are far closer to a top in dollar/yen and it is reasonable to expect a turn in the pair.

Euro-dollar dropped about 40 points in the aftermath of the release but recovered some of the loss, reflecting the market's uncertainty about the veracity of the figures.

Katrina's effect was far less destructive than initially feared. The true extent of the damage, however, may not be known until next month when the Labor Department will make adjustments to this preliminary reading.

The residual impact from the Fed is definitely positive for the dollar. The Fed message is clearly all systems go for 4.25 percent and maybe even 4.5 percent, which will increase the dollar's interest rate differential with other currencies.

The market is likely to go into a pre-jobs stall, from here on. If payrolls don't perform as the market expects, the euro could gain even further as that would put enormous pressure on the Federal Reserve to stop raising interest rates sooner than expected.