FX Update : ECB caution on Raising rates

UNICE said the ECB should go ahead with its widely expected December rate hike to 3.5% and then pause to evaluate several risks to Europe's economy.

The group cautioned that the ECB's rate tightening could cause the euro to appreciate, making European exports more expensive.

UNICE also said economic growth in the E.U.'s 25 member states could be fragile and further rate rises could prove an impediment to growth.

"After the December hike, the ECB should wait for convincing evidence of decisive inflationary pressure before deciding or flirting with new action," UNICE President Ernest-Antoine Seilliere said.

Slight Dollar strength showing all around the board, todays ECB Member speeches, could change the tone of the market short-term.