Austrian central banker Nowotny says he sees the bulk of the banking and financial crisis behind us and sees clear signs that danger for emerging Europe is over after help from the IMF and EU. But for the foreseeable future, the risk of deflation is greater than the risk of inflation. This suggests the ECB will stick to its guns and cut rates on Thursday and join the QE parade.
EUR/USD has dipped after the deflation comments, purhaps keeping the 1.3440 barriers safe through the 14:00 GMT expiry. We trade now at 1.3390.
