European stocks have logged their strongest weekly gains last week as the prospect of a Greek default and exit from the Eurozone was narrowly avoided. The STOXX 600 added 0.1% on Friday to close the day at 405.68, marking the eighth consecutive session of gains. The index added 4.3% over the week, its highest weekly gain since the beginning of the year when the European Central Bank (ECB) announced that it would employ a quantitative easing program in order to avoid a state of deflation. The German parliament approved the terms of the aid package for Greece on Friday, paving the way for negotiations for a third bailout to begin. Greece has also been awarded a €7.16 billion ($7.77 billion) bridge loan from the EU’s emergency fund program so that the country can fulfill its short-term obligations. On Friday, the German DAX 30 fell 0.4% to trade at 11673.42. The French CAC 40 gained 0.1% to trade at 5124.39 and the UK’s FTSE 100 fell 0.3% to trade at 6775.08.
The U.S. dollar held a strong position moving into the new week as investors look ahead to an interest rate hike from the Federal Reserve, causing gold to plummet to a five-year low. The precious metal suffered a sell-off during early Asian trading on Monday, dipping as low as $1,088.05 per ounce. As the Greek crisis seemed to reach some sort of resolution, the markets moved their focus to the U.S. market. It has been outperforming its counterparts, helping the U.S. dollar move to a seven-week high against the euro at $1.0818. The steady trickle of solid U.S. economic data and comments made by top Federal Reserve officials has driven expectations for an interest rate hike within the year. This helped the dollar gain against the Japanese yen as well, reaching as high as 124.15 yen – near its highest level in the last three weeks.
Oil prices were lower early on Monday, reaching $52.58 per barrel as new data releases revealed that Saudi Arabian exports have fallen to their lowest in the last five months despite record output. However, this was not enough to counter concerns that the newly struck deal with Iran would cause an even more severe oversupply of the oil market. The deal was signed last week and will eventually lead to the reintroduction of Iranian oil to the marketplace.
The coming week includes a number of important economic data releases. Australian inflation data will be released with consumer price index on Tuesday. U.S. existing home sales will be released on Wednesday and UK and Canadian retail sales data will be released on Thursday.