Last week saw the ECB continue their hawkish rhetoric, with comments from Trichet epitomising the central banks current stance. With libor rates continuing to move higher amongst the re-emergence of credit crunch fears, the ECB responded by saying they would provide extra liquidity this week and to at least the end of the year, providing more than benchmark in refinancing. This action, coupled with Trichet saying that there is a clear separation between monetary policy and liquidity should provide the clearest signal yet the ECB remains in its tightening cycle, with a number of ECB officials still worried by the treat of inflation. Looking ahead to this week, German IFO is released on Tuesday and should provide further evidence that sentiment has been increasingly dented by the credit crunch. Expectations are for the headline reading to have fallen to 92.1 from a previous 92.9. However, it is worth noting that last week the Belgium business morale survey, which is often seen as a pre-curser to IFO, did surprise to the upside with a reading of 1.4 in November from a previous -0.1 reading. As many of the hawks have continued to point out, inflation is still the key indicator that the ECB wish to tackle, so Euro-Zone CPI flash estimate will be closely followed. Consensus is for a 2.8% for the month of November, moving even further from the central bankâs target of just 2.0%. This will no doubt provide further ammunition for the hawk camp and will more than likely highlight the key reason why an interest cut looks increasingly unlikely. On the inflation front, we will also see the German state CPIâs released this week. Keep an eye on the Euro this week, after the EUR/USD rate was close to breaching the psychologically important 1.5000 level last week. At present the ECB is sticking with its âbrutal FX moves are unwelcomeâ rhetoric but a break of the key level could lead to the central bank taking a more firm stance. A raft of ECB speakers is due this week with Trichet, Kranjec, Tumpel-Gugerell, Papademos, Quaden, Draghi and Liikanen all making an appearance. Supply comes in the form of EUR 4bln worth of 2013, 2017 and 2022 auction from Belgium, and Germany is set to sell EUR 5bln 4.25% 2012 bobls on Wednesday.