Pseudo-terminal will not be allocated because stdin is not a terminal.

I just installed cygwin/X.    My system is:

$ uname -a
CYGWIN_NT-5.1 AGAINSTSTONE-LX 1.5.24(0.156/4/2) 2007-01-31 10:57 i686 Cygwin


I start the X server using the included startxwin.bat file.  In the xterm window this is what I got
$ ssh destination.host
Pseudo-terminal will not be allocated because stdin is not a terminal.
...

ssh asks me for password but as I type the password echoes into the terminal window!  I assume this is related to the warning message about not being able to allocate Pseudo terminal.  But why?  Why is my stdin not a terminal?  Anybody has a clue?

Thanks,
Peter