Despite the sharp downturn in growth, Trichet says EU governments should stick to the Growth and Stability pact which limits the room for maneuver among individual states. In my view, the Stability pact is terrific in “normal” economic conditions, constraining governments from overspending and weakening the euro, but in extraordinary times like today, it offers insufficient flexibility.
US equities are opening much firmer than futures would have suggested, helping give EUR/JPY a big boost. It trades now at 126.55, blowing through intraday resistance around 126.00.
