Portuguese central banker Constancio says deflation would be very hard to stop though he thinks deflation is not likely. He said that credit ratings downgrades create uncertainty in debt markets.
Those uncertainties noted by Constancio have been a big drag on the euro thus far this week as widening credit spreads between the German benchmark and the debt of less creditworthy countries like Portugal, Spain and Greece limit investor appetites for euro-denominated debt.
EUR/USD is running into selling on rebounds above the 1.3000 level again this afternoon. It has faltered in the 1.305/10 area three times since the New York open.
