Wednesday preview: Central bank activity to dominate

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In the absence of any major economic data, all eyes will be on the central banks on Wednesday as a number of key events are set to dominate headlines.

Quarterly updates from the likes of Lloyds Banking Group, Barratt Redrow and Gem Diamonds will also be in keen focus.

A monetary policy meeting at the Bank of Canada will steal the show on Wednesday afternoon, at which the central bank is widely expected to slash interest rates by 50 basis points to 3.75%. If policymakers vote as expected, this would mark the lowest rate since November 2022.

However, the chief economist at TD Bank has called for the BoC to cut rates by just 0.25bp. “The Bank must guard against creating a market and household psychology that every hiccup to economic growth expectations necessitates a strong monetary policy response," wrote Beata Caranci in a note on Monday.

Meanwhile, the Federal Reserve will release its so-called 'Beige Book' ahead of its November policy meeting. "Amid talk of growth re-acceleration following the strong jobs report, the Fed's Beige Book will provide an economic snapshot from the perspective of business contacts on Wednesday," said Oscar Munoz, chief US macro strategist at TD Securities.

Speeches from the heads of Bank of England and European Central Bank are also expected at the annual meetings of the IMF and World Bank taking place in Washington DC, with both Andrew Bailey and Christine Lagarde due to speak, along with policymakers from the Fed.

Not to be forgotten, newsflow from the second day of the BRICS summit will also be closely watched, particularly amid ongoing chatter surrounding the theme of de-dollarisation as gold prices go through the roof.

"The stockpiling seen throughout the BRICS group highlights one of the main reasons why we continue to see the precious metals space outperform, with claims of a gold-backed BRICS currency bringing plenty of speculation over why the metal will be increasingly in demand going forward," said Joshua Mahony, chief market analyst at Scope Markets.

Wednesday 23 October

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