But in vain, the announcement was again seen as too small to match the People’s Bank of China’s (PBoC) massive monetary easing, and failed to give the Chinese equities a sustainable boost. The CSI 300 was initially up but gains melted like snow under the sun: the index is flat at the time of writing, the CSI mainland real estate index is down by 4% and the Hang Seng index also gave back earlier gains. There is severe a disconnect between the Chinese authorities and investor expectations. The only way to bring the two groups to an agreement is the announcement of a massive fiscal spending figure that Xi’s government hasn’t been willing to do so far.

Copper and iron ore futures are down this morning, and the AUDUSD – though better bid after yesterday’s selloff below the 100-DMA, sees resistance near this level. Crude oil, on the other hand, remains under pressure a touch above the $70pb despite a surprise decline in US oil inventories last week, according to the latest API release.

China’s inability to cheer investors up and the fading worries that Israel will attack the Iranian oil facilities, combined with a deteriorating global demand outlook suggest that it’s not a matter of if, but a matter of when and by how much US crude will sink below the $70pb level.

The bearish oil outlook remains supportive of a softer Loonie against the greenback, along with the softening price pressures in Canada. Released yesterday, the latest CPI report revealed that inflation in Canada eased faster than expected in September and the headline figure now stands near 1.6% - backing further rate cuts from the Bank of Canada (BoC) to support the economy.

In the US, the unexpected fall in NY Empire manufacturing index gathered little attention yesterday. The US dollar index extended gains above the 100-DMA, as Cable slipped below the 1.30 level after inflation report in Britain came in softer than expected and boosted the Bank of England (BoE) doves’ expectation of rate cuts in Britain. The sterling bears are now testing the major 38.2% Fibonacci retracement, a few pips below the 1.30 mark, to reverse the April to September positive trend and send the pair into a medium-term bearish consolidation zone.

Across the Channel, the EURUSD took out the 200-DMA support yesterday and extended losses to 1.0850 level ahead of today’s European Central Bank (ECB) decision. The ECB is expected to lower its rates by another 25bp as the headline Eurozone inflation eased below the bank’s 2% target in September and the Eurozone economies are struggling to keep their head above water.

Germany, once the zone’s growth engine, is thought to be in mild recession, its car factories are suffering the Chinese EV competition – and will likely be heavily hit by the European tariffs on Chinese EVs that will fire back on the European carmakers. Its iconic VW already announced factory closures, and even ASML, which was the proxy of the AI trade in Europe, is not doing well after it confessed that orders are looking weak into 2025 due to a delayed recovery in chip industry – concerning other than AI chips, and the European luxury brands – which are among the biggest European companies – are heavily hit by the fading Chinese/Asian spending. LVMH erased all gains triggered by the Chinese stimulus optimism of late September and is back to the down-trending trend building since March this year.

Under these circumstances, the ECB could safely deliver another 25bp cut today and hint at more rate cuts to come. The only thing that could held the ECB officials back from sounding overly dovish is persistent core and services inflation in the region. The ECB members will likely remain cautious regarding that metric to make sure that the rate cuts don’t happen faster than the music. But in fine, the Eurozone needs financial relief and inflation’s trajectory, both in the Eurozone and away, are supportive of further monetary policy easing.

The market’s reaction to ECB decision and the post-decision presser could be mixed. A rate cut today, a dovish message from the ECB and another 25bp cut in December are already widely priced in. Lagarde's tone at the post-decision press conference will play a crucial role in determining whether the euro will further weaken against the dollar. We could see a buy-the-rumour-sell-the-fact reaction to today’s decision if Lagarde highlights risks regarding the softening inflation.

If the ECB does not convey strong confidence that today’s rate cut is merely a midpoint in a series of reductions, the EURUSD may experience a rebound from its near-overbought conditions. But any potential price rallies will likely see a solid resistance near the  1.0980 level, the major 38.2% Fibonacci retracement on April to September to rebound, and keep the pair within the medium-term bearish consolidation zone for further depreciation in the medium run.

Paradoxically, the Stoxx 600 index is trading near an ATH level as the cyclical nature of the European stocks fuelled by lower global rate prospects have been boosting appetite for European companies since a year now. Whether the European stock bulls will survive to what could be a gloomy earnings season is yet to be seen.

In the US, however, the earnings season is going quite well, as Morgan Stanley also announced better-than-expected earnings and closed the march for big banks on a positive note. The S&P500 consolidates near record.