- SWFX market sentiment is 52% bearish
- Trader pending orders are 54% to sell
- Pair opened Wednesday's session at the 1.1025 level
- Aggregate daily technical indicators bet EUR/USD will surge
- 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.
EUR/USD skyrockets on Trump lead
Daily chart: The common European currency skyrocketed and touched 1.13 level on Wednesday morning against the US Dollar. The reason is simple, as Trump was winning the US presidential election, and most market participants did not presume it to be possible. There is one reason why the markets did not think of it as possible. The reason is that most traders, bankers, asset managers belong to one social class in the societal hierarchy, which happens to be one of those that voted for Hillary Clinton. The personal bias has made most of forecasts wrong.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 rate 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 remain bearish
SWFX traders remain short, as 52% of open positions are bearish. In addition, 54% of trader set up orders are to sell.
OANDA traders remain with a bearish outlook, as 52.99% of open EUR/USD positions are short on Wednesday. Meanwhile, SAXO Bank clients have decreased their bearishness, as open short positions now add up to 58.75%, compared to 64.04% short positions during the previous trading session.