Oil price remained supported in European session. Market sentiment improved dramatically as US President Barack Obama is scheduled to announce new measures to bolster the employment situation tomorrow. WTI crude oil climbed higher to 86.5/87.4 today. The front-month contract slumped to as low as 83.2 yesterday but then staged a sharp rebound and ended the day at 86.02. The equivalent Brent crude contract faltered after failing to re-test 114 today. The contract jumped +2.55% yesterday. Other than Obama's stimulus, financial markets were also boosted by some news and events happened in China and the Eurozone.

Stocks rallied in Asia amid rumors that the Chinese government may ease monetary policy on reduced inflationary pressures. In Europe, bourses advanced as led Greece. The debt-ridden country pledged to accelerate austerity measures so as to secure international funding. Germany's top court rejected challenges to the country's participation in the Eurozone bailout plan also eased concerns.

Obama will reveal a $300B plan stimulus the job market before the Congress tomorrow. Measures are focused on tax cuts, infrastructure spending and assistance to local governments. The media said measures will include a 1-year extension of payroll tax cut for workers and an extension of expiring jobless benefits. Investors are desparately hoping that the measures will work as the job market has remained dismal in the US. Employment stagnated in August. While private sector positions increased +17K during the month, these were offset by the -17K decline in government jobs. The unemployment rate stayed unchanged at 9.1%.

In China, the China Securities Journal said the PBOC may ease monetary policy as inflationary pressures reduce. According to the newspaper, the PBOC may inject liquidity by buying bills from banks in open market operations or cutting the required reserve ratio for banks. The news, while unverified, boosted stock markets, especially the banking sector. Since 2010, the central bank has raised interest rates 5 times and increased the reserve requirement ratio 12 times in order to combat inflation. The result of tightening is the slowdown in economic growth while headline CPI rose to +6.5% in July (probably peaked). Yet, World Bank President Zoellick warned that 'it's too early to conclude that this [inflation problem] has been resolved'.

The Bank of Canada will likely leave the overnight rate at 1% today. Indeed, recent global economic turmoil and Fed's decision to keep interest rates at exceptionally low levels at least until mid-2013 should have postponed BOC's schedule to hike interest rates. We do not expect to see a rate hike until mid-2012. The after-meeting statement will be less hawkish as the central bank will probably remove the tightening rhetoric.