Australia: Poor manufacturing data from China and Europe weighed on the AUD as it struggled to break out of its overnight range of USD1.0463- 1.0558. The AUD received a bit of relief towards the end of the session though, after the European Union and the International Monetary Fund announced an agreement with the Greek government on austerity
measures for the next five years.

However the market is still not viewing this as a long term solution to Greece’s credit woes and the program still has to be voted on in Greece’s parliament, therefore the AUD’s gains were capped. During today, the AUD is not expected to break out of its recent trading range due to the absence of any fresh data being released. The market will be watching a lunch time speech by RBA Assistant Governor Phil Lowe hoping that he will provide some clarification on the RBA’s thoughts on higher inflation.

Majors: It was a mixed session for the EUR overnight, initially being sold off before recovering on news of Greece reaching a deal with European Union/International Monetary Fund officials for a five year austerity plan. Global growth and Greece debt concerns saw the EUR trade as low as USD1.4125 Thursday as the market remained choppy and sought safe haven assets. However it staged a bit of a comeback on the back of reports that a deal had been reached. The new plan will include a EUR3.8 billion funding gap through a variety of tax increases and spending cuts.

Although it’s a step in the right direction, the market still remains concerned over the possibility of default and wider financial stability. European equities were lower across the board while US equities were initially lower before paring back some losses later in the session.