Weekly FX Outlook: EUR/USD Back In Unchanged Territory

This week has once again centered around the constant reports surrounding Greece with the bottom line being that Greece are still yet to strike a deal with their creditors. Despite some more upbeat headlines in the early stages of the week from Greece who suggested they were going to intensify talks, as the week progressed it became more apparent that the EU are growing increasingly frustrated with the troubled nation. This subsequently led to reports on Thursday that the IMF see no headway towards concluding an agreement. As such, this hampered some of the upside seen earlier in the week for EUR and brought EUR/USD back to relatively unchanged territory. Elsewhere, it was a big week for antipodeans after the RBNZ unexpectedly cut its OCR by 25bps to 3.25% and hinted at future easing by saying the 90-day bank bill track implied one more cut to the OCR. This pressured the NZD in the latter stages of the week with the currency on track for its largest weekly decline on record with weakness also exacerbated by lower commodity prices on Thursday and Friday which also subsequently weighed on AUD and CAD. Looking ahead to next week, the main event on the calendar will very much be the FOMC meeting. Ultimately market participants are not expecting the Fed to take action with either September or December seen as a more likely timeframe for rate lift-off. However, an apparent improvement in US data as of late which has subsequently led to various US GDP tracker upgrades could lead to a more upbeat accompanying statement. Elsewhere, the SNB come to market with their latest interest rate decision, although they are widely expected to keep rates on hold. From a UK perspective, focus will be on the BoE minutes which should provide further insight to the balance of views on the MPC, with the release also to coincide with the latest UK inflation data (Y/Y expected to remain at 0.3%).

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