As to be expected, events surrounding Greece were a key focal point throughout the week as the two sides attempted to strike a deal. At the start of the week it was particularly apparent that the two parties were still at loggerheads and some form of compromise would needed to be made. However, towards the middle of the week, markets became more optimistic of a breakthrough with the Greek Fin Min increasingly hopeful that the two sides could form an agreement and thus helped provide EUR/USD with a modest bid. This sentiment was then further exacerbated upon source comments and subsequent confirmation that Greece had requested an extension to their loan programme. However, the approach for reconciliation from Greece fell upon deaf ears as the Germans rejected the request on the basis that it did not do enough to honour existing commitments and as such EUR/USD crashed through 1.1400 to the downside and meandered lower towards 1.1300 heading into the close of the week with an agreement still yet to be reached.
Elsewhere, this week saw the release of the FOMC, ECB and BoE minutes. In terms of the Fed release, the USD-index weakened by around 0.4% after many Fed members were in favour of keeping interest rates on hold for longer and thought that removing the "patient" phrase from its forward guidance could put too much attention on the date of the first rate hike. This subsequently helped further buoy the EUR move higher in the week with participants hopeful of an agreement, while the ECB minutes as expected appeared to be a non-event. This week has been an interesting one for the BoE with one of the more hawkish members McCafferty, adopting a particularly dovish tone by saying he is concerned about GBP appreciation, the BoE should refrain from rate lift-off and the prospect of negative interest rates is plausible.
Finally, commodity related currencies continued to be swayed by the ongoing events in energy markets with this week’s DoE and API data revealing substantial builds and thus hampering the likes of CAD, MXN, RUB, AUD and NZD. Further for AUD, the antipodean felt the squeeze after S&P said the Australian budget, due in May 2015, would be vulnerable to risk overseas which could risk the country's AAA rating. However, this downside would partially pared after S&P downplayed the severity of the comments.
Looking ahead to next week, all eyes will firmly be on what developments, if any, can be made between Greece and the Eurogroup with both sides at the time of writing yet to make any meaningful progress. Next week also sees Fed Yellen’s semi-annual testimony which could potentially reveal a more hawkish perspective than the latest minutes release which was documented before the impressive monthly jobs report from the US. Furthermore, participants will also continue to monitor the rhetoric from the BoE in lieu of the latest comments from BoE’s McCafferty.