- 57% of all SWFX open positions are short
- It is Election Day, time to focus on the fundamentals.
- The recent fluctuations are 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
As this article was written, Trump won the election. However, it needs to be noted that additional information will still affect the financial markets until some sort of equilibrium comes, and technical analysis dominates. Most likely the results will be contested, future policies will be set, and that will affect the strength of the US Dollar until the markets realize that the congress has not changed and that it is the institution, which passes the laws in the US not the President.
Gold jumps during the elections
Daily chart: Gold jumped during the US presidential election, as surprised market participants did not count on Donald Trump leading the race. The yellow metal managed to reach the 1,337 mark on early morning, as the Republican candidate had taken lead of the election. As noted before, the reason for the biased forecasts by the analysts around the world is that most of market participants belong to one social class, which voted for Clinton. In addition these type of analysts and market participants, and their opinion are considered important, as they manage large assets. However, nobody took into account that they might be biased.Daily chart
Hourly chart: Nothing much to add, regarding the hourly hour, except a few facts. There was absolutely almost no volatility previous to the start of voting. Afterwards, as voting began, the metal slightly moved lower until Trump took the lead at 01:00 GMT. The rate surged on the news until the markets began to relax at 05:00 GMT, and the rate moved slightly lower.
Hourly chart
Traders' short gold
OANDA open long positions have increased to 77.04%, compared to 72.96% on Tuesday. SAXO bank traders remain long, but have decreased their bullish positions to 55.22%, compared to 63.42% the previous session.