Trichet shows his hand, telegraphing a rate cut at the ECB meeting next week. Few will be surprised at that idea. The rest of Trichet’s remarks focus on medium-term inflation risks which the market has no interest in at the moment. We’re much more focused on asset price deflation to worry about wage inflation. Unemployment will take care of that…
Stocks have turned positive on the dovish talk from Trichet, helping lift EUR/USD back toward the 1.2470/80 area where it stalled an hour or so ago.