Stocks rally after progress on day one

Day one of the US-China trade talks reportedly went well, giving a boost to Wall Street. A positive turn in Brexit negotiations boosted the pound while oil prices rose after OPEC said it will do whatever it takes to prevent another oil slump.

 

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 index rallied the most this week after Trump said the talks went “very,very well” while China’s Liu said China is willing to reach agreement on matters that both sides care about and to prevent further friction

• The index held above the 200-day moving average at 25,996 and rebounded to close above the 55-day moving average at 26,474 for the first time this month.The 55-day moving average has crossed below the 100-day moving average today, which is often interpreted as a medium-term bearish signal

• It’s mostly second-tier data on the calendar today apart from the Michigan consumer sentiment index for October, which is expected to ease to 92.0 from 93.2 last month. There are also speeches from Fed’s Rosengren and Kaplan.

 

DE30EUR Daily Chart

Source: OANDA fxTrade

• The Germany30 index rose for a second straight day yesterday amid an apparent breakthrough in Brexit deal talks

• The index closed above the 100-day moving average at 12,124 yesterday for the first time since October 1. The 200-day moving average has risen to 11,852

• German consumer prices are seen rising 1.2% y/y in September, according to the latest survey of economists. This shouldn’t be a worry for the ECB as it considers further easing. We can also look forward to speeches from ECB’s Draghi and De Guindos.

 

WTICOUSD Daily Chart

Source: OANDA fxTrade

• Oil prices posted the biggest daily gain since September 16, the day after the attacks on Saudi production facilities. The rally came after the OPEC Secretary-General said OPEC and its allies would do “whatever it takes” to prevent another oil slump amid a slowing global economy

• West Texas Intermediate (WTI) touched the highest since October 2 this morning. The 55-day moving average is at $55.53 and prices have traded below it since September 30

• EIA data released Wednesday showed a further increase in inventories. To October 4, 2.927 million barrels were added to stockpiles, more than the 1.4 million expected and the fourth consecutive weekly increase.