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Election Results Continue

USD/JPY Chart
Source:  MT4 (November 4, 2020)

The USD/JPY whipsawed as the US election results were released. Support is seen near an upward sloping trend line that comes in near 104. Resistance is seen near the October highs at 106. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in negative territory with an accelerating trajectory which points to lower prices.
 

TAKEAWAYS


•    Election Day Count Continues; Divided Government 
•    The Yen Gains Traction
•    Technology Shares Rally
•    US Private Payrolls Miss Expectations
•    DAY AHEAD:Jobless Claims 
 

GURU WISDOM


“Patience is a virtue.” – William Langland
 

MARKETS


The election, or lack of a winner, shows that a “blue wave” was not in the cards, and the United States remains divided. While democrats looked at the character of the President, Republicans saw a leftward leaning leadership that would be too much to bear. Exit polls showed that the number one issue for Democrats was race relations and COVID, while Republicans focused on the economy. 

What did come out of the election is that a divided government will likely continue. The Senate should remain controlled by the Republicans. The stock market and investors generally like a divided government and the lack of legislation that would derail corporate profits. While the Democrats gained seats, they did not wrestle control. There are still 6-seats that are too close to call. In the wake of this decision, tech stocks rallied. There was a perception ahead of the election that a Democratic-controlled Senate would take the technology companies to task, and the outcome has come as a relief to investors which has allowed technology shares to rally. 

In the wake of the non-election results, the dollar whipsawed. Gold prices also edged higher but remain rangebound. Crude oil prices continued to rebound following a larger than expected draw in crude oil inventories reported on Wednesday by the Energy Information Administration.
 

ADP Private Payrolls Rise Less than Expected


Private job growth grew less than expected in October as the spread of COVID has reduced economic activity. According to ADP and Moody’s Analytics, private companies added 365,000 positions in October, well below the 600,000 forecasted by economists. That was the lowest reported gain from ADP since July. Services added to the bulk of the jobs that were created in October, notching up gains of 348,000. Job growth was equally added to both small and large companies in October. Separately, in the US, the ISM Services number was released and came in softer than expected. According to the Institute of Supply Management, the non-Manufacturingpurchasing managers index came in lower to 56.6 in October versus 57.5 expected.
 

China Data Continues to Impress


China continues to post gains in its service sector showing that the country’s economy is expanding. The Caixin/Markit services PMI for October rose to 56.8, up from 54.8 in September, which was the 6th straight reading above 50 (which is expansion territory) and the highest reading since June.

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