Dollar drops to 2-month low

GURU WISDOM

“Show me the Money.” – Jerry Maguire
 

MARKETS

The dollar hit a 2-month low against most major currencies as riskier assets continued to gain traction. This week the Nasdaq 100 has rallied slightly more than 9%, led by many of the stocks that buoyed the equity markets during 2020. The US Presidential results are still hanging in the balance but Vice President Biden has overtaken President Trump in Pennsylvania, Georgia, and Nevada. US yields moved higher on Friday following a much stronger than expected US payroll report. For the week, the US 10-year treasury yield declined 6 basis points to 0.82%.

During the week the US Federal Reserve kept interest rates unchanged in November. Bigger picture, this should continue to help riskier assets. 

Oil prices tumbled nearly 4%, as election uncertainty weighed on prices. Vice President Biden has made it clear that he has a goal of making the US more carbon-neutral, which is not good for the oil industry. The rig count also rose during the week with oil rising by 5 and gas rigs falling by 1. Gold prices also edged higher after breaking out on Thursday. Silver prices also gained during the week. 
 

Non-Farm Payrolls Rise More than Anticipated

US nonfarm payrolls rose by 638,000 more than the 530,000 expected according to the US Labor Department. More surprisingly, the unemployment rate dropped to 6.9%, compared to expectations that it would be edged down to 7.7%. This is compared to 7.9% in the prior month. The drop in the unemployment rate came despite an increase in the labor force participation rate that rose 0.3% to 61.7%. The U6 unemployment rate which includes discouraged workers fell, to 12.1% from 12.8% a month ago. 

The unemployment rate is a household survey where calls are made to determine if people are working. This compares to the non-farm payroll report which is a corporate report of jobs that are created. The Household survey reported that a robust 2.24 million people started jobs in October. The biggest job gains came in leisure and hospitality which saw a climb of 271,000. 
 

White House seeds discord

President Trump does not want to concede the election and has told advisors that he plans to fight the election in court until December. The President on November 5, did a press conference alleging fraud and saying that the Democrats were attempting to steal the election from him.