Testifying before the European Parliament, Trichet says that policymakers must be sure decisions made today do not lay the ground work for disorder in the future. He calls for more regulation of financial markets and says monetary and fiscal measures are being implemented swiftly, on a large scale.
It is important to remember that the Fed’s slow pace of monetary tightening after the deflation scare that followed 9/11, the bursting of the dotcom bubble and corporate scandals of the early part of this decade sowed the seeds for thew credit bubble that burst last year, many feel. Trichet is keen to avoid inflating fresh bubbles in an effort to reflate the overall global economy.
EUR/USD is recouping a portion of the ground lost in early Asian trade after the G7 failed to provide the market with much to chew over in its wake. As Sean so often points out, the first move of the week in Asia can often be faded. Looks like that is the case again this weeak as early weakness is reversed. EUR/US trades at 1.2795, up from 1.2725 lows.