There’s still over 2 hours before markets really get going — Tokyo opens at 8:00 PM ET — but in very early action the euro is already falling.
Bloomberg reports trades as low as $1.2338 in early Japanese trading.
Expect to hear the word “parity” a lot in the coming days ahead, even though that’s a long way off.
Meanwhile, the man at the centre of the storm, Jean-Claude Trichet gave an interview with Der Spiegel in which he swore up and down that the ECB was not in fact engaged in quantitative easing (all bond purchases will be “sterilized” via the removal of liquidity elsewhere). But more to the point, he insisted that the ECB remains an independent body.
And to the German audience for whom the interview was intended — an audience that’s both upset about the bailout, and paranoid about inflation — he was adamant that there wasn’t much to worry about.
I fully understand the particular sensitivity of my German friends. But facts are facts: Inflation in Germany has never been as low as it has been over the past 11 years. The German fellow citizens can see that the euro has indeed been a good store of value over time.
Next stop: Explicit quantitative easing.
Now for some perspective, here’s a lifetime Euro chart from Calculated Risk:
Photo: Calculated Risk