Main focus turns to ECB meeting

Thursday, October 22, 2015

China’s President Xi Jinping confirmed yesterday that energy company China General Nuclear (CGN) will invest $6 billion for a one-third stake in the UK’s first new nuclear plant for 25 years, at Hinckley Point in Somerset. However, there were some increasing concerns regarding the security implications of China’s involvement.

A London-Hong Kong Commodities Link was proposed yesterday during the visit of Xi Jinping in Britain in order to boost and expand ties between the British and Chinese economies. A non-binding agreement was signed yesterday as part of the cooperation between the two Prime Ministers, while the plan by Hong Kong Exchanges and Clearing Ltd will connect its futures market to the LME, allowing market participants of the Chinese exchange to buy, sell and clear trades on the LME. HK Stock Exchange reported in a statement that the new link is expected to reduce costs for Chinese investors, provide access to the LME and better manage trading risks.     

The main focus will turn to the ECB meeting as investors remain cautious awaiting the speech of ECB’s President Mario Draghi regarding market expectations. We do not expect any big surprises coming out of the meeting as it seems unlikely the ECB to introduce further QE into the European economies, partially due to inflation concerns and increasing worries regarding the Eurozone’s economic growth. The euro remained under pressure ahead of the ECB rate announcement, hovering around 1.13 against the USD. European equities were mixed in early trade with the CAC and IBEX falling slightly while the DAX added 0.30%. France’s business confidence rose to 101 in October, beating estimates of 100.   

EUR remains under pressure around 1.13 against USD

EURUSD Curncy (EUR-USD X-RATE)   2015-10-22 09-14-21

It is a busy day on the US macroeconomic front. Market participants will be keeping an eye on the release of the weekly jobless claims data, Chicago Fed National Activity Index, Existing Home Sales and Leading Index figures in September as well as the FHFA house price index in August. The USD index extended gains for second consecutive session and climbed above 95.0 against a basket of currencies ahead of the key economic releases.

Crude oil prices rebounded this morning following sharp losses yesterday. The release of the weekly EIA oil inventories report showed a large increase of 8.02 million barrels for the week ending 16th October, while distillate and gasoline inventories dropped by 2.62 mln and 1.51 mln barrels, respectively. WTI front month futures recovered towards $45.50 per barrel and Brent futures edged higher above $48 per barrel.

WTI front month futures rebound towards $46/barrel

CLZ5 Comdty (WTI CRUDE FUTURE  D 2015-10-22 09-14-56

 

 Events for today:

0900

EZ

Oct

ECB Monthly Report

0930

UK

Sep

Retail Sales

1245

EZ

Oct

ECB Rate Decision

1330

US

Sep

Chicago Fed

1330

US

w/e

Jobless Claims

1400

US

Aug

FHFA House Price Index

1500

EZ

Oct

Consumer Confidence

1500

US

Sep

Existing Homes Sales

1530

US

w/e

EIA Nat Gas

 

All times UK Local Time

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