On the week this is almost the status quo

The Friday meeting was placed under the sign of inflation. The figures reflecting the evolution of prices, both published for the eurozone than in the US, came out rather moderate and consistent with expectations. In the United States, the consumer price index rose 0.2 in August and 3.8 on an annual basis (2.8 excluding food and energy). To the euro zone, the price index is increased by 0.1 month last and 2.3 on an annual basis, after 2.4 in July.

At the time, bond markets finished the week on a slight relaxation. The rate of the German Bund 10 years lost 2 basis points to 3,767, when of the OAT French same maturity fell 2 points to 3,778. The performance of the American loan to the 10 years ended stable at 4,792. On the week, this is almost the status quo. The performance of the 10-year us lost 1 point base in five sessions, while both French and German borrowings show each yield fell by 3 points.

Inflation data were not further upset the foreign exchange market. The yen fell against the dollar, which was trading at 117,97 Yen Friday evening. Caution has been strengthened in the expectation of the conclusions of the G7, which met this weekend, and called on China to revalue its currency. In the communiqué issued at the end of the meeting, the forum of the rich countries reiterated the call made at its previous meeting for greater flexibility of exchange rates in emerging economies that have large surpluses of current accounts, indicating that the exchange rates should reflect economic fundamentals. However, the release of the G7 did not mention explicitly the weakness of the yen.

Withdrawal of the euro

Meanwhile, the euro finished the week down against the greenback after first sessions sawtooth. Friday evening, the single currency was worth $ 1,2645, against 1,2674 the previous Friday. This was its lowest since July 26.

Since the beginning of August, the euro operates within a fairly narrow range of 1.26 to 1.29 dollar. The uncertainty that weighs on the evolution of the monetary policy of part of the Atlantic is found in the evolution of the parities. The euro was on a bottom-up slope to the US dollar in the spring, stakeholders in anticipation of the next stop to the cycle of monetary tightening by the Federal Reserve in June 2004, while the European Central Bank had just started his own in December 2005. But, since the summer, the expectations are less clear and market is looking at whether the status quo of the Fed on 8 August was a simple break.

Stakeholders may have elements of a response as soon as this week. The Federal Reserve meets on Wednesday its monetary policy Committee. The market is betting on a new status quo to 5.25. Beyond that, nothing is safe. "The status quo is widely expected, attention will focus on the release, noted Barclays Capital." The Fed should prove to be a little more worried about inflation by referring to the strong increase in unit labour costs. This reference could be a signal showing that the Fed is not comfortable with the vision of the market that the tightening cycle is over and that interest rates could be lowered.