Move in currency markets still swinging randomly amid dealing with a delayed and fraught process to determine the future political make-up of Washington with unusual poise. US stocks and government bonds rallied sharply even though the widely anticipated sweeping victory for Democratic presidential candidate Joe Biden failed to materialize and his party was unlikely to take control of the Senate.
However Joe Biden now very close to wins the presidency race. He is just 6 electoral votes away and market is expecting Biden presidency as well as Republicans hold in the Senate makes things status quo apparently. Accordingly Vix index that measures the expected volatility of US equities dropped sharply from a high of 36 points on the eve of the election to 28.1 points by midday on Wednesday.
Although markets still remain cautioned that significant legal challenges to the election results could weigh heavily on sentiment. “Any suggestion that the outcome could be contested by either the Trump or Biden campaigns is likely to be viewed dimly by investors, and could give way to a period of renewed volatility in equity and currency markets as mentioned in FT.
US Market extends gain on Wednesday
The US stock market finished session higher on Wednesday, 04 November 2020, adding to the strong gains posted in the previous session, as investors risk sentiments bolstered on prospects for a big stimulus effort for the economy.
The rally on Wall Street came as traders reacted to the results of the U.S. elections on Tuesday, which have yet to reach a definitive conclusion. Democratic candidate Joe Biden is currently in the lead in the race for the presidency, with the latest projections giving the former vice president 248 electoral college votes. Biden is also leading in Nevada and Michigan, which would give him the 270 electoral college votes needed to unseat President Donald Trump.
US ISM Services Index Slows In October- US service sector activity slowed by more than expected in the month of October, according to a report released by the Institute for Supply Management on Wednesday. The ISM said its services PMI dipped to 56.6 in October from 57.8 in September, although a reading above 50 still indicates growth in the service sector. The bigger than expected decrease by the headline index came as the new orders index slid to 58.8 in October from 61.5 in September and the business activity index dropped to 61.2 from 63.0. The report said the employment index also fell to 50.1 in October from 51.8 in September, suggesting employment in the service sector was nearly unchanged.
Meanwhile, the ISM said the prices index jumped to 63.9 in October from 59.0 in September, indicating a notable acceleration in the pace of price growth. The ISM released a separate report on Monday showing growth in U.S. manufacturing activity accelerated by much more than expected in the month of October. The purchasing managers index climbed to 59.3 in October from 55.4 in September, with a reading above 50 indicating growth in manufacturing activity.
US Trade Deficit Narrows In September– US trade deficit narrowed to $63.9 billion in September from a revised $67.0 billion in August, a report released by the Commerce Department on Wednesday. The narrower deficit came as the value of exports jumped by 2.6% to $176.4 billion, while the value of imports rose by 0.5% to $240.2 billion. The spike in exports partly reflected a sharp increase in exports of soybeans as well as a notable increase in exports of capital goods. Meanwhile, increases in imports of passenger cars and capital goods were partly offset by steep drops in imports of cell phones and other household goods and industrial supplies and materials. The report said the goods deficit narrowed to $80.7 billion in September from $83.8 billion in August, while the services surplus was nearly unchanged at $16.8 billion.
US ADP Private Sector Employment Growth Eases In October– US private sector employment rose by 365,000 jobs in October after spiking by an upwardly revised 753,000 jobs in September, according to a report released by payroll processor ADP on Wednesday. The report said employment in the service-providing sector spiked by 348,000 jobs, while employment in the goods-producing sector edged up by 17,000. Employment at mid-sized businesses climbed by 135,000 jobs, and employment at large and small businesses increased by 116,000 jobs and 114,000 jobs, respectively. Employment is expected to increase by about 600,000 jobs in October after climbing by 661,000 jobs in September. The unemployment rate is expected to edge down to 7.7% from 7.9%.
TREND : WEAK BULLISH
Time : 05/11/2020
Pivot : 1.1704
Technical View : LONG ABOVE 1.1724
Target : 1.1744, 1.1795, 1.1826, 1.1902
Technical View : SHORT BELOW 1.1684
Target : 1.1664, 1.1648, 1.1582, 1.1541