Crude oil price hovers around 70 in European morning as weakness in USD boosts demand for commodities.

Stock markets continue to advance after RBA's rate hike Tuesday as this signaled economic recovery. In Asia, the MSCI Asia Pacific Index gained +1.2% while Japan's Nikkei 225 Stock Average climbed +0.3% to 9832. In Australia, S&P/ASX 200 Index rose +1.6% to the highest level in a year as the number of employment surprisingly surged 40.6K in September after a decline of 24.6K in the previous month. The market had anticipated another month of drop by -9.7K.

In Europe, equity markets extend strength. UK's FTSE 100 pares gain and is rising less than +1% after the Bank of England announced to keep the policy rate at 0.5% and the asset purchase program at 175B pounds. Although the decision came as expected, the statement that the scale of the program would 'be kept under review' added uncertainty to the outlook.

At the ECB meeting, which was held in Venice, the Governing Council of the ECB decided to keep its main refinancing rate for a 6th consecutive month at 1%, while the interest rates on the marginal lending facility and the deposit facility also stayed at 1.75% and 0.25% respectively. A press conference will be held at 1230 GMT.

While it's also widely anticipated the policy rate will stay at 1% today and for an extended period of time as general price level remains subdued, recent rally in gold price has triggered attention the inflation outlook.

Gold price strengthens to as high as 1059.6 in European morning. The following chart showing inflation expectation has been rising in the Eurozone. At the same time, correlation between gold price and inflation expectation has increased significantly since April 2009. Will recent rally in gold price, as an implication to higher inflation expectation, trigger a more hawkish stance in ECB in coming meetings? We believe this is probable.

Others in the precious metal complex also rally with silver soaring +1.9% to 17.83, the highest level in 14 months. Platinum also jumps +1.4% to 1346.

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