4 in July after staying unchanged in June

The members of the European Central Bank (ECB) have made the word. These days, their fire was fed the inflation risk. At the expense of the State bond market. "This is not the time to relax," said the Governor of the Austrian National Bank, Klaus Liebscher yesterday. "My concern is that we see that inflation excluding energy costs also increases", he said on the sidelines of meetings of Finance Ministers and central bankers of the G7 to Singapore. "Our assessment in the medium term is on the rise," said José Manuel Gonzalez-Paramo with regard to the inflation risk. And the decline in oil prices does not change. Previously, their counterparts within the Eurosystem, including Jean-Claude Trichet, President of the ECB, have displayed their extreme vigilance on inflation.

"We need to ask on the scope and the adequacy of our monetary policy," said Axel Weber, President of the Bundesbank. "We will see strong inflation dynamics throughout 2007 and 2008", he added. Jürgen Stark, the Chief Economist of the ECB, for its part noted some signs of increase in the power of the companies in price fixing. For him, the risk side price are therefore clearly on the rise. Mario Draghi, Governor of the Bank of Italy, said that the euro-zone interest rates were still "extraordinarily low" and that the savings capacity began to dry up.

Slight increase in the euro

In this context, on the bond market, yields are strained. The rate of the loan of French State for 10 years and rose 6 basis points to 3,843, and 2 years of

5 points to 3,686. This trend is checked too, more limited proportions, on American loans, where the 10 years it is stretched by 4 points, 4,83. For Ken Wattret at BNP Paribas, statements by central bankers are consistent with the idea of a rate hike on 5 October, for a continuation of the movement in December and with the notion that "there is no signal in December that the increase in the rate cycle is finished." According to Reuters, quoting yesterday monetary sources, the ECB would be ready to continue its movement of the rate increase, potentially over 4 next year.

Yesterday, the euro-zone industrial production certainly disappointed expectations, slipped 0.4 in July after staying unchanged in June. Economists on average hoped an increase of 0.52. "But the trend of industrial production remains intact," said Martin van Vliet at ING. "Despite this fall, and in view of the recent rhetoric from several of the members of the ECB, we continue to expect at least 50 point basis of rates in the current cycle.". The first increase of 25 basis points will be issued next month.

On the currency front, the day seemed more favourable to the euro, in the days of the decision of the Federal Reserve. The single currency is exchanged at 1,2681 dollar later in the day, against 1,2645 on the eve of the weekend. The publication early in the afternoon of the numbers of foreign net purchases of us securities ($ 70 billion expected 32.9 billion) also weighed on US-dollar yields. Without however to propel the euro outside the range of fluctuation in which it is enclosed since the month of May.

In these times where inflation continues to occupy the minds, foreign exchange dealers will monitor this afternoon the American price index production for the month of August. In addition, they fear that the index Zew economic sentiment in Germany is revealed penalizing for European currency this morning.

Meanwhile, the yen yesterday known another difficult day in the wake of a G7 press release made no mention of his weakness. The euro thus rose of 147,85 Yen at 149,65 yen.