Wall Street weaker, pressured by tech sector

The Friday rebound on Wall Street proved fleeting as selling restarted yesterday, led by the tech sector amid concerns about earnings reports. Gold topped the dollar as the go-to safe haven, while Brexit stalemate and Italy budget concerns capped European bourses.

US30USD Daily Chart

Source: Oanda fxTrade

• The US30 index closed lower yesterday as concerns over tech sector earnings and disappointing data weighed. The index did not reach last week’s lows however, and has started positively today

• The index is still holding above the 200-day moving average at 25,136, and has yet to test the 55-week moving average at 24,812

• US Sep retail sales missed estimates yesterday. Today we see industrial production data for Sep, which is expected to slow to +0.3% m/m from +0.4%. Another disappointment would pile additional pressure on the index

 

DE30EUR Daily Chart

Source: Oanda fxTrade

 

• The Germany30 index rose for a second straight day yesterday, defying the downward pressure on Wall Street

• The index remains above the 200-week moving average at 11,473 and the positive start for US index futures suggests this will continue to provide support

• ECB’s Draghi sees underlying inflation hovering around 1%, confident it will move toward target. Italy approved deficit-boosting budget yesterday. Now awaits the EU’s response

 

XAUUSD Daily Chart

Source: Oanda fxTrade

• Gold touched its highest in more than 2-1/2 months yesterday as a softer US dollar helped its status as a safe haven

• The metal is testing the 100-day moving average at 1,228. A sustained breach of that would bring Fibonacci resistance at 1,239 in to play

• It’s not just a weak dollar and safe haven buying that is boosting gold. Consumer demand out of India for the festive and wedding season is also picking up