Commodities firmed in European session although stock markets in both Asia and Europe retreated. The focus has been shifted from the Fed to the ECB which will hold meeting on Thursday. Draghi's comments that the central bank would consider buying bonds up to maturity of 3 years have driven market sentiment. It is widely anticipated that the President would deliver more details about the new bond purchase program on Thursday. Gold strengthened further in European session but the 1700 level continued to be a hurdle for the metal to overcome. Crude oil prices steadied and the near-term outlook should be bullish amid stimulus hopes. Yet, both the WTI and Brent contracts are more on consolidative mode today, especially ahead of the release of the US ISM manufacturing index.

ECB President Draghi told the European Parliament that the central bank could consider buying bonds with maturity of up to 3 years as this would not breach EU rules. At his speech, Draghi showed support of further unconventional monetary easing measures as the central bank would be unable to perform its task of pursuing price stability with the Eurozone being fragmented. He stated that the new program aims at sustaining the 'existence of the euro in a moment when the rest of the world has now started to question the existence of the euro'. The market currently anticipates that the upcoming meeting would contain more details about the bond purchase program including the seniority issue and the ceiling of the purchase.

Commodity prices were lifted modestly by a slightly hawkish RBA which left the cash rate unchanged at 3.5% for a third consecutive month in September. While acknowledging that risks to global economic outlook skewed to the downside, the RBA assessed that domestic economic growth is 'close to trend' as 'led by very large increases in capital spending in the resources sector'. Its confidence was not affected by concerns over the fading of mining boom investment in Australia.

On the dataflow, Switzerland's GDP unexpected contracted -0.1% q/q in 2Q12, down from a downwardly revised +0.5% gain in the previous quarter. The market had anticipated a slowdown to +0.2%. In the UK, the construction PMI fell to the contractionary territory, to 49 in August, from 50.9% in July. Eurozone's PPI bounced back, gaining +0.4% on monthly basis in July, as driven by strength in oil prices. In the US, ISM manufacturing probably climbed higher to 50 in August from 49.8. Construction spending might have risen +0.4% m/m in July, gaining the same as the prior month.