Countries across Europe have reimposed lockdown measures aimed at slowing the rate of COVID-19 infections that have been rising on the continent for the past month. Lockdowns announced by the UK and Italy have only added to the worsening situation in Europe, said CMC Markets chief market strategist in Sydney.

Crude oil prices fell to a five-month low in Asian trading earlier in the week amid concerns about global demand. The panic in global energy markets was justified after Prime Minister Johnson said on Sunday that the UK was preparing to go into lockdown from November 5 until early December after the country reported a record high number of daily COVID-19 cases last weekend.

Risk appetite has indeed dimmed over the past week due to the rising COVID-19 cases in Europe, the failure to reach an agreement on stimulus, and the upcoming US presidential election tomorrow, all of which have pressured energy commodity prices.

It’s going to be a big week with Tuesday’s US presidential election taking centre stage. The uncertainty around the election has led to risk aversion and investors are looking to safe havens while they wait and see who the next US president will be, says AMP economist Shane Oliver.

Oliver added that the prospect of a stimulus deal before the election has been closed, with investor attention shifting to ways to get stimulus to help the economy after the election. Democratic presidential candidate Joe Biden is ahead according to polls, but analysts see little chance of Democrats taking the Senate and House of Representatives.

Market review and economic data to be released today:

The first week of November has the potential to provide great trading opportunities because it is supported by several important sentiments such as:

  • US Election quick count results, US Non Farm Payrolls employment data and interest rate decisions of World Central Banks such as the US Central Bank (The Fed), as well as the Australian and British Central Banks.

Sentiment from last week will also still move the market such as:

  1. The number of Covid-19 cases is still high in a number of countries, thus potentially hampering economic recovery.
  2. Negotiations on the US fiscal stimulus package have not yet been completed and the long Brexit negotiations have not yet reached a bright spot.
  3. Monday, November 2, 2020, there are several data that have the potential to support the movement of AUDUSD, however, the Chinese manufacturing activity data released by Markit has the potential to have a major impact on the Australian dollar considering that China is Australia's largest trading partner, so if this data is released better than expected, AUDUSD has the potential to move up.
  4. Furthermore, EURUSD will also get a number of driving catalysts from manufacturing activity index data from major European countries. High manufacturing activity will support a country's economic growth. With the high number of Covid-19 cases in Europe, manufacturing activity growth there is likely to be depressed, and EURUSD has the potential to weaken if the data is released lower than expected.
  5. Next, the pound, the Canadian dollar and the US dollar will also get important driving factors from the manufacturing activity index data which will be released in the afternoon and evening respectively. If the data is released lower than expected, the respective exchange rates could weaken. Gold prices could strengthen if the US dollar weakens.

Daily Pick

Today's prediction is that the EUR pair (EUR USD) is expected to decline and the recommended OP is SELL at level 1.16350 with a profit target of 10 - 20 points and a stop loss of 5-10 points.

  • TP 1 = 1,16250
  • TP 2 = 1,16150
  • SL 1 = 1,16400
  • SL 2 = 1,16450

Always prioritize Money Management and Risk Management.

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