In advance of ECB decision and with a week delay - here's the latest leading indicator for Euro area growth - eurocoin - as issued by CEPR (link to release here).
As shown above, eurocoin posted a small decline from 0.62 in May to 0.52 in June. This reading is below 3mo MA of 0.57 and behind 6mo MA of 0.56, but is 13% ahead of the June 2010 reading of 0.46. The series continue to signal expansion, albeit at a slower pace.
Mapping out eurocoin alongside quarterly growth rates suggests, should eurocoin lower trend be established in July-August - slower growth in Q2/Q3 2011:
Lastly, a chart mapping eurocoin against ECB decisions:
The above suggests that although eurocoin signals alleviation in the pressures on ECB to raise rates this month, there is, nonetheless continued disconnect between the historical rates and eurocoin readings. Historical relationship between level and changes in eurocoin and ECB repo rate implies repo rate around 2.0-2.5% or roughly double current rate.