- 51% of all SWFX open positions are short
- It is Election Day, time to focus on the fundamentals
- The recent fluctuations were caused and dictated by the US presidential election
- Economic events to watch over the next 24 hours: Elections of the President of the United States of America
German factory orders dropped unexpectedly in September amid weak domestic demand and sluggish overseas demand, official data showed on Monday. According to Destatis, orders for German-made products fell 0.6% in the reported month, the biggest drop since April, after rising for two consecutive months, while market analysts expected a 0.2% increase. Meanwhile, the August gain of 1.0% was revised down to 0.9%. Despite the September drop, however, the overall growth of factory orders remained positive in the Q3. Destatis also pointed to improved sentiment indicators that provided hopes for a rebound in the industrial sector over the rest of the year. Nevertheless, analysts remained cautious, noting that the sector remained weak since 2013-2014. Domestic demand declined 1.1%, whereas foreign orders fell 0.3% in September. Factory orders from other countries in the Euro zone decreased 4.5% in the same month. The drop was mainly driven by lower demand for capital goods produced in the Euro zone's largest economy. Orders intermediate and consumer goods increased modestly. The German economy was expected to lose steam in the Q3 2016, after expanding 0.7% and 0.4% in the Q1 and Q2, respectively.
US private companies added fewer than expected jobs last month, whereas the unemployment rate improved slightly, the October Non-Farm Payrolls report showed on Friday. According to the Bureau of Labor Statistics, the US economy created 161,000 new jobs in the reported period, while market analysts expected nonfarm payrolls to increase by 174,000. Meanwhile, the September gain was revised up to 191,000 from the originally reported 156,000. However, the odds of a December rate remained quite high, despite today's disappointing jobs report. Furthermore, average hourly earnings advanced 2.8% and 0.4% on annual and monthly basis, respectively, while average weekly remained unchanged at 34.4 last month. The unemployment rate declined unexpectedly to 4.9% in October, following the preceding month's 5.0%. After the release, the US Dollar declined slightly against other major currencies, trading at 1.1111 against the Euro and 103.10 against the Japanese Yen. Separately, the Bureau of Economic Analysis said on Friday that the US trade deficit narrowed to $36.44 billion in the same month from September's gap of $40.46 billion, which was revised up from the originally reported $40.70 billion deficit. Economists expected the US trade gap to decrease to $37.80 billion during October.
Upcoming fundamentals: Ignore everything but the election
The title says it all. Look at the elections, look at the results coming in from the states. Traders have to remember that a Clinton victory is likely to bring a surge in stocks and their indices and the US Dollar. A Trump victory will bash the Mexican Peso, and the Swiss Franc together with gold will surge. On the other hand, risk averse market participants are most likely to close their positions.
Gold finds support on Tuesday morning
Daily chart: The yellow metal was in a rebound on Tuesday morning, as the bullion found support in a strong cluster near the 1,280 level. The cluster is made up of the 20 and 200-day SMAs, monthly pivot point, weekly S1 and the lower trend line of the previous ascending channel pattern. On early Tuesday morning the metal faced no resistance up to the level of 1,294.23, where the weekly PP is located at, which means that a surge up to this level is likely. The surge will occur, if no fundamental or political news suddenly shock the market.Daily chart
Hourly chart: The hourly chart reveals that the bullion began Monday by dropping until the fall was hindered by the 200-hour SMA at 10:00 GMT. However, the fall continued and the commodity price bottomed at 17:00 GMT 1,278.12. There it rebounded against the lower Bollinger band and has been rebounding since then. As the metal approaches the 200-hour SMA once more, the surge might be hindered by the SMA.
Hourly chart
SWFX traders are neutral
OANDA open long positions have increased to 72.96%, compared to 68.99% on Monday. SAXO bank traders remain long and have increased their bullish positions to 63.42%, compared to 56.09% the previous session.