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Election Day Looms

BTC/USD weekly chart
Source:  MT4 (November 2, 2020)

The BTC/USD broke out and continues to trend higher testing resistance near the June 2019 highs near 13,880. Support is seen near the former breakout level near 13,000. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to higher prices.
 

TAKEAWAYS


•    Bitcoin breaks out on a weekly chart
•    ISM Manufacturing Surges
•    Chinese Manufacturing PMI Rises
•    Dollar Gains Traction
•    The VIX consolidates after last week’s gains
•    DAY AHEAD: US general election
 

GURU WISDOM


“It ain’t over till it's over.” – Yogi Berra
 

MARKETS


The US general election is on Tuesday, November 3, and the outcome is still up in the air. Despite a 10-point lead (according to an NBC/Wall Street Journal Poll) released on Sunday, November 1) for former Vice President Joe Biden, investors are leery of counting Trump out. Battleground states such as Pennsylvania, Florida, North Carolina, George, and Arizona will hold the key to the election. The Democrats are also expected to take the Senate and gain more seats in the House of Representatives. This is what is currently priced into the markets. A contested election is not and will generate volatility.

The dollar continued to gain traction on Monday, rallying against the Euro for a 6th consecutive trading session. The dollar index rallied to the highest level seen since September 25. Gains were seen versus most major currencies. 

Gold prices rebounded despite the rally in the greenback as US yields eased. Crude oil prices rebounded from lower levels and settled higher on the trading session. In the latest week, the US reported an increase in the volume of crude oil produced, despite a slowdown in production from the Gulf of Mexico in the wake of Hurricane Zeta.
 

Manufacturing Rise in the US and China


US manufacturing activity rose to a 2-year high, increasing to 59.3 in October, following a 55.4 reading reported in September. Expectations were for the manufacturing index to increase to 55.8.   New orders jumped to a 17-year high as demand for used cars increased during the pandemic. New orders rose to a robust 67.9 in October the highest level since 2004. This is a forward looking index and bodes well for economic output. Manufacturing was robust across the globe. In a separate report, the Chinese Caixin manufacturing PMI rose to 53.6 in October, up from 53.0 in September. 
 

The VIX Consolidates


The VIX volatility index, which measures the “at the money” implied volatility on the S&P 500 index, consolidated on Monday, declining less than 1%. The VIX surged last week rallying more than 38% ahead of the US general election.  While the VIX is elevated, it is well below the 85-level that was hit in March as the pandemic initially impacted the United States. The current reading of 37, is nearly triple the average level seen throughout most of 2019. 
 

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