<p>The US midterms take place on November 8 and it all likelihood we will have a very good idea of who holds that balance of power that night. However that wasn’t the case in the most-recent US election and it might not be the case again on Tuesday.</p><p>Ballot counting is fraught by different systems, recounts and slow processes. If it’s too close to call, it will take some time to sort out but that’s not all.</p><p>In Georgia, one of the tightest races, we could see a repeat of 2020. In that race last time neither candidate received 50% of the vote so it went to a runoff that ultimately hoisted the Democrats to 50 seats and control of the Senate. That ultimately proved to be pivotal as it allowed them to pass numerous stimulus bills.</p><p>Polls for that race show libertarian candidate Chase Oliver sitting at 3-4% of the vote. If that’s enough to prevent Warnock or Walker from getting a majority, the runoff wouldn’t take place until December 6, leaving the balance of power in question.</p><p>An equally-close race is in Pennsylvania between Dr. Oz and John Fetterman. In that state, mail-in ballots aren’t counted until the day after election day and that could take days.</p><p>Arizona is also hotly-contested and voting there is mostly done by mail and in 2020 it was one of the last battlegrounds to be decided. The state also has an automatic threshold of 0.5% for a recount.</p><p>Add in the potential for candidates refusing to accept results and it could be a bumpy time.</p>

This article was written by Adam Button at forexlive.com.

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/evans-fed-is-looking-for-the-right-level-of-restrictiveness-20221104/“>Evans: It’s likely Fed funds peak will be revised ’slightly higher‘ in December</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/stocks-moving-higher-is-still-a-hard-uphill-road-20221104/“>Stocks moving higher is still a hard uphill road to travel</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/unexpected-surge-in-canadian-jobs-in-october-makes-50-bps-from-boc-more-likely-cibc-20221104/“>Unexpected surge in Canadian jobs in October makes 50 bps from BOC more likely – CIBC</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/baker-hughes-us-oil-rig-count-3-20221104/“>Baker Hughes US oil rig count +3</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/more-from-feds-collins-all-options-on-the-table-at-feds-next-meeting-20221104/“>Feds Collins:All options on the table at Fed’s next meeting. Supports slower pace of hikes</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/audusd-on-track-for-the-biggest-move-since-2011-20221104/“>AUDUSD on track for the biggest % move since 2011. Can the momentum keep up?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/vitol-threatens-to-cut-off-german-natural-gas-in-1-billion-standoff-20221104/“>Vitol threatens to cut off German natural gas in $1 billion standoff</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-barkin-we-could-potentially-have-a-higher-end-point-on-rates-20221104/“>Fed’s Barkin: We could potentially have a higher end-point on rates</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-collins-time-for-fed-to-shift-focus-from-size-of-rate-hikes-to-the-ultimate-level-20221104/“>Fed’s Collins: Time for Fed to shift focus from size of rate hikes to the ultimate level</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/oil-gets-a-double-dose-of-good-news-climbs-more-than-4-20221104/“>Oil gets a double dose of good news, climbs more than 4%</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canadian-dollar-suddenly-has-everything-going-for-it-20221104/“>Canadian dollar suddenly has everything going for it</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canada-october-employment-change-1083k-vs-100k-20221104/“>Canada October employment change 108.3K vs. 10.0K</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-october-non-farm-payrolls-261k-vs-200k-expected-20221104/“>US October non-farm payrolls +261K vs +200K expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/chinas-xi-we-will-continue-to-open-up-and-pursue-win-win-cooperation-20221104/“>China’s Xi: We will continue to open up and pursue win-win cooperation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boes-bailey-says-wont-sell-gilts-when-sales-might-increase-market-dysfuction-20221104/“>BOE’s Bailey says won’t sell gilts when sales might increase market dysfuction</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-is-the-strongest-and-the-is-the-weakest-as-the-na-session-begins-20221104/“>The AUD is the strongest and the USD is the weakest as the NA session begins</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/forexlive-european-fx-news-wrap-dollar-drops-as-risk-gains-on-china-hope-nfp-up-next-20221104/“>ForexLive European FX news wrap: Dollar drops as risk gains on China hope, NFP up next</a></li></ul><p>The US nonfarm payroll came in better than expected at 261K vs 205K estimate. The prior month was revised higher to 315K from 263K. So stronger 300K growth month on month with the revision included. The average hourly earnings came in at 0.4% vs 0.3%. So that was higher. The unemployment rate moved higher to 3.7% but coming off record low levels is 3.7% much different than 3.5%? It still is a strong employment market. </p><p>The dollar went higher right?</p><p>Not so fast. </p><p>Initially, the move was to the upside, but stocks in pre-market trading hung in there. Then the dollar, perhaps seeing stocks not going down, started to sell. The stocks starting to see the dollar fall, and it moved higher. Yields moved around, but the shorter end started to come down helped by some Fed talk from Fed’s Collins who said it is time for the Fed to shift focus from size of rate hikes to ultimate level, and later said that all options should be on the table for the Fed’s next meeting including a 25 basis point hike and a 75 basis point hike. </p><p>Hmmmm. OK. </p><p>Fed’s Barkin said </p><ul><li>Now real rates are positive so you could credibly say we have our foot on the brake</li></ul><p>Hmmmm. OK. Although are rates at 4.65% for the 2 year and the Fed funds at 4% positive real rates? I thought PCE and CPI and other measures of inflation were still higher. </p><p>Anyway, it wasn’t until September 20, that the Fed policy was „restrictive“ (i.e., above 2.5%) and this last hike did move further into restrictive policy, but employment remains strong. Before September 20, you can argue that policy was still expansionary. </p><p>Fed Chair Powell was less positive about the prospects for a peak rate soon this week.</p><p>Time will tell. </p><p>The markets today wanted all to end, with stops moving higher, the yield curve steeper, and the dollar lower. So that’s what it did.</p><p>Looking at the strongest to the weakest of the major currencies, the AUD is ending the day where it began, as the stronges of the major currencies. In fact the AUDUSD pair had its biggest one day advance from a percentage basis going back to 2010 (up 3.07%). </p><p>The USD was the weakest of the major currencies with declines of 1.12% (versus the JPY) to 3.07% (vs the AUD). . </p><p>In the US equity market, the major indices moved higher initially at the open, and then gave back all the gains and traded lower, before rebounding and closing higher for the day. </p><ul><li>Dow industrial average closed up 403.53 points or 1.26% at 32404.79</li><li>S&P closed up 50.72 points or 1.36% at 3770.60</li><li>Nasdaq closed up 132.32 points or 1.28% at 10475.26</li><li>Russell 2000 closed up 20.13 points or 1.13% at 1799.86</li></ul><p>For the week, the major indices still closed lower.</p><ul><li>Dow industrial average fell -1.39%</li><li>S&P index fell -3.34%</li><li>NASDAQ index tumbled 5.65%</li><li>Russell 2000 fell -2.54%</li></ul><p>In the US debt market today, the yield curve steepened with the shorter end lower and the longer end higher.:</p><ul><li>2 year is trading at 4.66%, -4.1 basis points</li><li>5 year is trading at 4.332% -1.9 basis points</li><li>10 year is trading at 4.164% +4.1 basis points</li><li>30 year is trading at 4.257% +10.5 basis points</li></ul><p>In other markets as the week comes to a close:</p><ul><li>Spot gold is trading up $51 on the back of the week dollar that’s up 3.16% at $1680.50. Gold was up at 2.17% this week</li><li>Spot silver is trading up $1.43 or 7.42% the $20.88. Silver rose 8.64%</li><li>WTI crude oil is trading up $4.44 or 5.04% at $92.61. WTI crude oil rose 5.37%</li><li>Bitcoin love the risk on and is trading at $21,053. That’s up $844 on the day. For the week bitcoin rose 2.23%</li></ul><p>Thank you for all your support. Wishing you all a great and healthy weekend. </p>

This article was written by Greg Michalowski at forexlive.com.

<p>Comments in the Fed’s stability report</p><ul><li>Treasury market has functioned smoothly since last report in May</li><li>Market liquidity remained low in several key areas and that could amplify volatiltiy and may ultimately impair market functioning</li><li>Economic outlook has weakened, uncertainty remains elevated</li></ul><p>US regulators haven’t done enough to prevent air pockets in the bond market. The explosion in short-dated options trading is also something that’s obviously going to end in disaster at some point as well.</p>

This article was written by Adam Button at forexlive.com.

<p>Here’s the picture in gold the way I see it.</p><p>1) It has declined for seven straight months</p><p>That’s certainly not a sign of a bull market but nothing falls in a straight line and the decline of 13% is better than many major currencies over that period. The decline is mostly a story of US dollar strength and a tightening Fed.</p><p>2) Central banks are buying heavily</p><p>The World Gold Council reported that central banks bought 399 tons of bullion in the third quarter, which was nearly double the previous record for Q3. It’s unclear which central banks were buying but eyes are on Russia and China due to the US’s weaponization of the US dollar.</p><p>3) Beyond maximum central bank hawkishness</p><p>There were 6 major central bank decisions in the past week and 5 of them were dovish. The Fed ratcheted up the terminal rate but only „slightly“ as Chicago Fed President Charles Evans <a target=“_blank“ href=“https://www.forexlive.com/centralbank/evans-fed-is-looking-for-the-right-level-of-restrictiveness-20221104/“ target=“_blank“>said </a>today. To be sure, central banks are still hiking but the pace is slowing and markets generally move on the second derivative.</p><p>What worries me is the technicals</p><p>The chart isn’t great. There’s still a daunting double top at $2070 and the latest bounce looks like a retest of the base of it before a further fall. The measured target of the double top is $1350.</p><p>What makes me skeptical that it’s going to happen is that it hasn’t happened yet. It’s been a perfect storm of USD strength, central bank hawkishness and a rout in risk assets yet it’s held up ok.</p>

This article was written by Adam Button at forexlive.com.