Read full technical analysis report here
- China’s ruling Communist Party opened a key meeting on Monday that will focus on financial reforms and how to maintain growth of around seven percent and more broadly map out economic and social targets for the next five years. The Central Committee, the largest of the party’s elite governing bodies with more than 200 full members, is gathering until Thursday to finalize the 13th Five-Year Plan, a blueprint for economic and social development between 2016 and 2020. The meeting takes place amid growing concerns over a slowing Chinese economy. China cut interest rates for the sixth time in less than a year on Friday. Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008/09 financial crisis, as growth looks set to slip to a 25-year-low this year of under 7 percent. China’s economy grew 6.9 percent in the July-to-September quarter from a year earlier, data showed last week.
- The euro fell to two-month lows against the dollar on Friday one day after European Central Bank President Mario Draghi signaled that further monetary easing is likely later this year. The drop in the euro came after Draghi said the ECB had discussed lowering the deposit rate at its meeting on Thursday and added that that the back could enlarge its asset purchase program or speed up bond purchases. The comments underlined the diverging monetary policy stance between the Federal Reserve and central banks in the rest of the world. The Fed is currently expected to start hiking interest rates sometime in early 2016. The dollar received an additional boost after China’s central bank unexpectedly cut interest rates on Friday. It was the sixth rate cut since last November, amid efforts by authorities to shore up slowing growth in the world’s second largest economy. In the week ahead, investors will be focusing on Wednesday’s monetary policy announcement by the Federal Reserve for fresh indications on the timing of an initial rate hike. Friday’s monetary policy announcement by the Bank of Japan will also be closely watched. Market participants will also be awaiting preliminary estimates of third quarter growth from both the U.S. and the U.K.
- Crude oil prices remained weak on Monday as a slowing demand outlook implied oversupply will remain in place for months, prompting speculators to cut their bets on rising prices. NZ bank said it expected prices to remain low for the remainder of this year and that speculators were cutting their bets on higher prices. Net speculative (U.S.) long positions declined by 13,841 contracts for the week ending 20 October, we remain cautious on commodity prices into year-end given weak demand conditions. On the demand side, research agency Energy Aspects said in its quarterly outlook that it forecast a sharp slowdown in global oil demand across Q4 15 at 0.8 million barrels per day, which marks the slowest pace of growth in five quarters Energy Aspects said the ongoing oversupply in crude oil was starting to spill into the market for refined products, with a product stock-build of 0.6 million barrels per day seen in the third quarter. Rising inventories as well as a mild winter expected for Europe and North America as a result of El Nino would likely lead to reduced refinery production and lower use of crude oil by refiners, Energy Aspects said. Due to the low oil prices, investment in the sector in 2016 will likely decline further after sliding this year by more than a fifth, Fatih Birol, the executive director of the International Energy Agency (IEA), said on Monday.