The currencies continued to chop around on Friday, driven by the latest headlines coming from the EU/Greek talks on the renegotiation of Greece’s debt. The end result was that the Euro finished up pretty much where it started, after an agreement of sorts, to extend the bailout period for 4 months. The winner was the Aud$, which benefited from the improved risk sentiment, while the Yen lagged, as the need for a safe-haven diminished. This week will be busy with plenty of data due for release but with the highlight probably going to be Janet Yellen’s semi-annual testimony to the US congress (Tue/Wed). The market will be watching closely for any possible hint as to when the first rate hike might occur, although she is likely to give very little away at this stage. Today leads off with the German IFO & the US Existing Home Sales, while later in the week key features will be a couple of speeches by Mario Draghi, the German GDP (Q4) & EU CPI (Tue), The EU/German CPI, EU targeted LTRO (Thur) and the US GDP, Durable Goods Orders (Fri).
The Euro came under pressure in early European trade on Friday following the soft manufacturing PMI’s from both Germany and the EU, while the German PPI also missed expectations. It fell to a low of 1.1278 before rebounding sharply through the rest of the session, reaching a high of 1.1428 on improved hope of a deal over the Greek debt situation which were verified towards the end of the trading day. Greece finally secured a provisional deal from the EU to extend the bailout for four months, but will only get the financial assistance if it meets certain conditions, to be revealed in a letterto be delivered by Greece later today, although this was enough to keep the Euro underpinned through the rest of the session.
