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BREAKING: Non-Farm Payrolls Beat Expectations, but Election Fatigue Sets the Tone


November 6, 2020
The latest Non-Farm Payroll report published by the US Bureau Labor Statistics surprised Wall Street to the upside. Despite the harsh economic conditions in the country, 638,000 new jobs were added to the non-farming sector in October. Although 34,000 down from September’s figure (672,000), the reading beat analysts’ expectations of 600,000.
BREAKING: Non-Farm Payrolls Beat Expectations, but Election Fatigue Sets the Tone

Additional details of the report revealed that the unemployment rate dropped to 6.9% from 7.9% in the previous month, and again came in better than the expected 7.7%. Furthermore, the labor force participation rate climbed to 61.7% from 61.4% in September while the average hourly earnings rose by 4.5% year-on-year.  However, America needs a lot more to resume its path to greatness…

Canada also published its employment change data today. According to the Labor Force Survey, the Canadian labor market expanded by only 84,000 versus 100,000 as forecast, however, 0.5% higher in October compared to the previous month.

Further data shows that unemployment rate held steady at 8.9% in October, little changed from September (9%).

Currency Market

As usual, currencies are the most sensitive to data releases like the non-farm payroll. EURUSD peaks at 1.18740, up nearly 0.48% on the daily time frame as election fatigue dominates the markets. The US elections have always had the character of a global show, but no other ballot cast has ever been so emotionally draining. Yet, on the upside, political analysts suggest we might have a call (nothing like the margin call) soon enough as Democratic challenger Joe Biden has taken the lead in Georgia and “promises” to flip Pennsylvania too. Arizona, Alaska, North Carolina and Nevada also remain up for the taking. Last night’s count in Maricopa County, Arizona brings Biden closer to the cusp of the desired 270 electoral number, ahead of Trump. Yet no numbers have been confirmed yet.

Moving forward, USDCAD clings on to 1.30 on the daily chart, little changed from the day’s beginning.

USDJPY tumbles to 103.58, testing multi-month lows. Any opportunity for recovery might be seen as a “sell”, keeping the pair capped in that neighbourhood.

By comparison, AUDUSD is seen supported in the area of 0.72500 at the time of writing.

Cryptocurrencies face another boom

Next on today’s agenda, cryptocurrencies are again racing towards a market boom. As expected, Bitcoin is leading the trend, trading above $15680 against the US Dollar, a sharp rise last seen in 2018. How long will this winning streak last though?

ETHUSD followed suit, jumping from high to high. At the time of writing, hovering above $437.00, the uptrend in the pair is also driven by the breaking news about the launch of Ethereum 2.0, which is due on December 1. Counting the days to the big day, Danny Ryan, Ethereum 2.0 researcher told CoinDesk “This has been a long time coming, and countless researchers, engineers, and community members have put blood, sweat, and tears into this project. Feels good to finally bootstrap Ethereum’s long-awaited proof-of-stake consensus.”

Indices Edge Lower on Election Fatigue

In general, too much uncertainty is exhausting for the markets. On emerging ballots for Biden and continued court threats and false statements made by the incumbent US President Donald Trump, US indices plummeted. Leading the downtrend, Dow 30 dropped 0.51%, S&P 500 slipped 0.56%, and NASDAQ lost as much as 1.33% on Wall Street on NFP day.

Similarly, the US Dollar Index (DXY) tumbled to 92.20, little moved by the NFP release.

Commodities

WTI Crude tumbled from its safe area around $40.00, to $37.7 on the day, dragged lower by the inconclusive election results.

Gold, however, hit $1960 fresh tops after the NFP as investors seek safety. Not bad to conclude the trading week. Stay tuned for more.


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