• US equity futures climbed with earnings in focus
• Chinese FDI data may help ease recent weakening trend on AUDUSD
• EUR exchange rates lack resilience amid surging COVID cases
US equity futures surged on Monday despite light trading volume due to the Martin Luther King Jr. Day holiday. This week we will see major companies reporting their earnings, including Bank of America, Morgan Stanley, Goldman Sachs and Netflix. Analysts at JP Morgan expressed that the upcoming earnings season could potentially brighten the mood. For now, investors are cautious given that Biden’s inauguration could entail risks of more mob violence. Elsewhere in the equity market, APAC shares edged higher as China has been confirmed as one of the few countries to grow over 2020, with its Q4 GDP landing at 6.5% YoY. Shanghai Index rose 0.84% on Monday and Hang Seng index gained 1.01%.
The risk-sensitive AUD typically benefits from China’s promising economic data, but this time it felt against USD. One potentially explanation might be the breakdown in Sino-Australian relationship. Another one is USD’s recent strength across major currency pairs. AUDUSD is nearly 2% lower from its multi-year high. Nevertheless, AUD traders will be watching China’s foreign direct investment data which is expected to release later today. December’s FDI data is expected to show a record-breaking year for investment into China.
In Eurozone, concerns over the pandemic has caused EURUSD exchange rate to tumble in recent weeks. Last week, USD rebounded against EUR and pushed EURUSD down from the level of 1.2220 to 1.2075. Investors are hesitant to buy Euro as it comes with limited support to battle the COVID crisis. With more nations under lockdowns and restrictions, there is not much news on how local governments and ECB are actively keeping the Euro buoyed.