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Stocks Rally Ahead of Payroll Data

Bitcoin 
Source:  MT4 (November 5, 2020)

Bitcoin broke out rallying 5.6% on Thursday, as the dollar eased. Prices are poised to test target resistance near the all-time highs at 19,269. Support is seen near the recent breakout level at $12,050 and then an upward sloping trend line that comes in near $11,500. Momentum is accelerating as the RSI (relative strength index) broke out confirming the price break out. The only caveat is that the current reading on the weekly RSI is 77, above the overbought trigger level of 70, which could foreshadow a correction. 
 

TAKEAWAYS


•    Election Results Continue
•    Bitcoin Surges
•    Stocks Continue to Rally
•    Jobless Claims Edge Lower
•    Fed Keeps Rates Unchanged
•    DAY AHEAD:Employment Report
 

GURU WISDOM


“To the moon Alice.” – Ralph Kramden

MARKETS


Riskier assets continued to rally as the concept of a divided US government continues to drive stock prices higher. The Nasdaq 100 has rallied 9% this week and the move could be getting overextended. While the outcome of the Presidential election is unlikely to matter to the market, a change in the Senate races could generate concern. Polls are now showing that incumbent Senator David Perdue showing total results either at or just under 50% which would generate a runoff. The other seat in Georgia is also headed for a runoff. With 6-Senate seats up for grabs, the rally could be derailed temporarily if investors perceive a runoff could create a non-divided Senate.

As expected, the US Federal Reserve kept interest rates unchanged in November. They continued to say that the risks of lower economic output outweigh the potential for higher inflation. They also focused on the need for additional fiscal stimulus. US yields continue to remain subdued, with the 2-year treasury yield near 15-basis points and the 10-year down to 75-basis points off 15-basis points since the election on November 3. 

The dollar continued to trend lower declining to 92.7 on the dollar index, down from a high of 103 in March. The decline in the greenback helped buoy precious metals with silver rallying 5% and gold climbing 2.3%.  Gold prices also edged higher but remain rangebound. Crude oil pricesended a 3-day climb, moving down by 1.25%. 
 

Jobless Claims Decline Less than expected


US jobless claims edged lower on Thursday according to the US Labour Department. First-time unemployment claims eased to 751,000 down from 758,000 in the previous week. Expectations had been for a more robust decline down to 741,000. This was the 3rd consecutive decline in initial jobless claims below 800,000. Continuing claims fell for the sixth straight week, to 7.3 million. 
 

Non-Farm Payrolls


The US Employment Report is scheduled to be released on Friday. The Labour Department is expected to report that the US economy added 600,000 jobs, slightly less than the August 661,000 figure. The unemployment rate is forecast to decline to 7.7% from 7.9%.
 

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