The European Central Bank left its benchmark interest rate at a historically low 1% as expected, but the key to today's Euro movement will be what comes out of the mouth of ECB President Trichet.

Trichet is expected to address two key issues: the extension of liquidity support and his opinion on the European bank stress tests. As it currently stands, the current ECB stimulus program is set to expire in October. Investors are looking at the possibility of an extension of this program due to the negative effect the Greek sovereign debt crisis has had on the Euro Zone economy. Investors are also looking for Trichet's opinion on the on-going bank stress tests. They are looking for Trichet to say that he believes the tests will be stringent enough to restore investor confidence.

Stocks moved higher this morning following the release of a better than expected drop in Weekly Initial Jobless Claims. Actual claims dropped 21,000 to 454,000. Pre-report estimates were for claims to come in at 460,000.

September Treasury Bonds and Treasury Notes broke on the news of the drop in Initial Claims. Yields in the 10-Year Notes crept back above the important 3% level. Treasuries may get hit hard today as traders forego their safety and lower yields for riskier assets.

The U.S. Dollar weakened against most major currencies following the release of the Initial Claims Report. The Japanese Yen fell on the news. Look for pressure on this currency if equity markets continue to rally.

To recap Wednesday's trading action, an improved outlook for earnings helped boost U.S. equity futures following sluggish overnight session. U.S. stock index futures turned higher shortly before the opening after trading lower overnight because of fear about a slow down in the global economy. Investors in Asia and Europe also began to take risk off the table on concerns that the current European stress tests will not be stringent enough to recover potential problems with the banking system.

There were no major U.S. economic reports on Wednesday so the focus shifted back toward the economy and earnings. Investors have been selling the Dollar lately and buying higher risk assets. This was especially apparent on Tuesday when weak U.S. ISM Services data turned around a weaker stock market. This morning upbeat earnings news regarding State Street Corp. helped turn investors optimistic about the upcoming earnings season. The money manager projected that second-quarter profits would be well above analysts' forecasts.

The strong rally based on the upbeat forecast was an indication that earnings will be the major catalyst in the market over the next three weeks.

Technically the September E-mini S&P 500 confirmed Tuesday's closing price reversal bottom with a follow-through rally on Wednesday. The strong rally has the market in a position to test its first upside objective at 1066.00. A move through this level could trigger an even further rally to the 61.8% level at 1081.00.

Strong demand for higher yielding assets helped drive the September Treasury Bonds lower. The first clue that this market was topping was revealed on Tuesday after the T-Bonds failed to rally following the release of a weaker than expected U.S. ISM Services Report. This market now appears to be set up for a correction back to 125'15. A strong rally in the equity markets is likely to trigger the start of an acceleration to the downside.

August Gold made a closing price reversal bottom on Wednesday, triggered by oversold conditions and a weaker Dollar. The chart pattern indicates a move to $1224.30 is likely over the near-term. If there is no follow-through to the upside on Thursday, then look for a resumption of the downtrend with $1158.30 the next likely downside target.