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The European Central Bank will announce the rate decision as usual at 11:45 GMT

Wednesday, April 4, 2012 3:50 AM GMT

Good morning ,  

-The European Central Bank will announce the rate decision as usual at 11:45 GMT and expected to keep the key lending rate (Main Refinancing Rate) steady at 1.0% alongside the deposit facility and the marginal lending facility at 0.25% and 1.75% respectively

-Inflation according to the ECB is pressured by the rise in energy and taxes

-Draghi is expected to highlight the progress and actually use a slightly more upbeat rhetoric in expressing the signs of stabilization but will keep the promise to act if needed and do all that is necessary if the economy slows down more than expected, as till now it remains in a mild recession. We see the bank on hold and Draghi will avoid a signal for any rate cut or even a new round of cheap money

-European stocks closed lower on Tuesday hit by concerns over Spain’s ability to tackle its deficit.The Stoxx Europe 600 Index erased 1.07 per cent to 264.29. Germany's DAX Index fell 1.05 per cent and France's CAC 40 Index retreated 1.62 per cent. The U.K.'s FTSE 100 Index declined 0.62 per cent to 5,838.34.

-It is very hard to see how Spain can have a sustainable recovery, debt levels are high in the country and also with unemployment, rising growth will be difficult

-U.S. factory orders rose for the third month in February, boosted by desire for business equipment. Bookings increased 1.3 per cent, Commerce department data showed on Tuesday.The manufacturing sector is the rock on which the recovery is being built and the base is as stable as it gets

-The economy has leaned on the manufacturing sector for much of the growth during the entire recovery. There appears to be no reason to believe that will change anytime soon. As the economy continues to strengthen, more of the pent-up demand will be released

-U.K. construction activity jumped to a 21-month high in March, reinforcing hopes that the economy has not slipped back into recession. The purchasing managers index for the industry rose to 56.7 in March from 54.3 in February, showed a survey by Markit and the Chartered Institute of Purchasing and Supply.

-The UK economy is still facing huge challenges and the recovery is much too slow. The UK has the potential to recover, but to achieve that the Government has to set businesses free to grow

-The strengthening yen “drags down shares as it has the greatest impact on manufacturers’ earnings . Investors are beginning to doubt the BOJ will continue to ease monetary policy and are unsure it will promote  reflation . From the beginning of this year, developers gained quite a lot, so  investors are selling the shares to lock in profit

-Following yesterdays post rates decision slide, the Australian dollar remained under pressure overnight succumbing to broad based US dollar strength after the Federal Reserve minutes indicated little need for further policy easing initiatives.

Have a nice  day !

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