Thursday's initial ECB reaction had.....>

EURO-DOLLAR: Thursday's initial ECB reaction had seen rate spike to a high of

$1.1432 only to quickly drop back, marking an extended intraday low of $1.1356

during the NY afternoon, as markets picked up on ECB Draghi comments concerning

Italian banks debt exposure, as well as reaction to new Fed vice Chair Clarida

comments seemingly placing him in the hawkish camp. Rate recovered to $1.1375

into the close, touched a high of $1.1377 in early Asia before a softening in

equities, along with a soft CNY fix, added to risk aversion and pressed rate

back to $1.1358 into Europe. Rate also seen under pressure as banks position for

expected month-end flows, early model predictions suggest strong USD buying to

be seen at Tuesday's fixes. Equity market action continues to be watched as a

barometer for risk. S&P's review of Italy's sovereign debt rating, as well as

comments from ECB's Draghi & Coeure in focus ahead of US Q3 GDP first estimate,

median 3.3% QQ though traders show expectations for a stronger number. Support

remains into $1.1350, a break to expose $1.1315/00 area. Traders note decent

sized option expiries for today's NY cut, notably $1.1350(E1.29bn),

$1.1375(E1.25bn), $1.1400(E827mn), which could act to keep rate anchored.