Cypriot central banker Orphanides says that the debt of every euro area country will be honored. EU rules do not call for other countries to voluntarily bail out other countries, he says. He expects Greece to obey EU budget rules going forward. He expects loose policy to avoid an extended period of inflation undershooting target. He sees the ECB continuing its policy of full allotment to banks at fixed rates.
Identifiable flows are tough to come by today but traders do note some German buying of EUR/GBP out of London this morning. Cable dipped close to session lows at 1.6080 before steadying.
