The ECB will do what is necessary to preserve price stability, says President Trichet. Against a severe asset price deflation, cuts are whats needed to maintain stability in the medium-term, the market thinks. Markets have a Fed cut priced in next week and the ECB is not far behind.
EUR/USD is a bit firmer in early Asian trade, supported by steps by South Korea to firm up its financial system and on word that ING has received a EUR 10 bln capital injection from the Dutch government.
