This week's Greek problems and Chinese stock markets have touched the market's nerves, Greece's vision of reaching a debt agreement and a strong rebound in Chinese stocks have prompted the euro to rise on Friday. The previous ups and downs in Greece and the free fall in the Chinese stock market have made investors nervous, causing a sharp drop in global stock markets, commodities and commodity currencies, and driving a sharp rise in the safe-haven yen.
Sunday is the deadline set by EU leaders for Greece to reach a debt agreement. Whether an agreement can be reached will affect the euro's trend. All EU member states will hold an emergency summit on the same day to discuss how to curb the impact of Greek financial collapse.
Looking ahead to next week, major central banks will have a intensive schedule. The Bank of Japan, the European Central Bank, and the Bank of Canada will hold meetings and announce interest rate decisions. Federal Reserve Chairman Yellen will attend the semi-annual hearing on monetary policy in Congress; the data is not light either. The United States and Europe will release inflation data, and China will release GDP and trade balances and other data. These factors will provide clues to economic performance and foreign exchange market trends.
next week's important economic data and events
Greece's vision of reaching a debt agreement pushes up the euro
euro firms early Friday, while the safe-haven currency yen fell as signs that Greece's efforts to obtain new funds have made some progress.
The Greek government submitted a reform plan to euro zone creditors on Thursday, hoping to get new funds to avoid bankruptcy, and plans to hold a vote in parliament on Friday to be allowed to act immediately.
As Greece's largest creditor, Germany has also made a little concession, acknowledging that Greece needs to reorganize part of its debt, which is necessary to achieve medium-term public fiscal sustainability.
, supported by Greece's vision of a possible agreement with its creditors, the euro expanded its gains, up 0.4% against the dollar to $1.1081, and up 0.9% against the Japanese yen to 135.06 yen, rebounding from the previous six-week low of 133.30 yen. The dollar rose 0.5% against the Japanese yen to 121.88 yen.
Traders said that the euro's failure to stay above $1.11 is a clear signal that the euro bulls are not overly optimistic.
"Signs of possible disintegration of the European Monetary Union (EMU) will likely cause the downward pressure on the euro to rise sharply," said Jane Foley, senior foreign exchange strategist at Rabobank.
"That is, the system remains intact and there is no sign of the most vulnerable link that will provide support to (Euro)."
pound pound rose to 1.5371 against the US dollar from a one-month low of 1.5330. The Bank of England kept the index interest rate unchanged at 0.5% as expected, and the market almost had no response.
China's violent rescue has achieved results
The Chinese government's dazzling rescue measures seem to have finally paid off, and the stock market continued to rise on Friday after a full-blown rebound on Thursday, helping to enhance investors' risk appetite.
safe-haven yen followed, and the dollar rebounded above 121.500 against the yen from a seven-week low of 120.410 yen.
The situation in the past month is severe, with the Greek issue and the sharp drop of Chinese stock markets of more than 30%, dominating the global market trend. Investors tend to seek safer and more liquid assets when financial markets or geopolitics are under pressure.
These factors drive the yen to record its biggest single-day increase this year on Wednesday.
But concerns about the Chinese stock market still exist. Investors are not sure whether the worst is over in the short term, and the cost of a government's vigorous rescue of the market may affect the market in the long run.
In addition to attracting global attention from the Chinese stock market and Greece issues, Federal Reserve Chairman Yellen delivered a speech on the outlook for the US economy on Friday night, which is also a very eye-catching event.
Commodity currencies continue to rise
AUD and New Zealand dollars continue to rise on Friday, continuing to rebound from the decline earlier this week as Greece came up with new reform proposals and Chinese stocks rebounded for the second consecutive day.
AUD rose 0.4% to 0.7478 against the US dollar, breaking away from Wednesday's and a six-year low of 0.7372, but the weekly line still fell 0.45%.
AUD rose stronger against the safe-haven yen, rising 0.95% to 91.15, and also out of the low of 89.13.
"We had a lot of negative news early this week, and the Australian dollar fell below $0.74 at one point, but now we are seeing the positive side -- so it's not surprising that the Australian dollar rebounded to around $0.75," said Ray Attrill, co-head of global foreign exchange strategy at NAB.
New Zealand dollar rose 0.2% to an intraday high of $0.6772 as a rebound in global stocks eased risk aversion and further lifted the New Zealand dollar from the five-year low of $0.6620 hit on Tuesday.
New Zealand dollar is expected to close 1% higher against the U.S. dollar weekly line, while the previous 11 consecutive declines. New Zealand's slowdown in economic growth prompted the country to cut interest rates last month, hitting the New Zealand dollar.
Market insiders believe that the New Zealand dollar may rise to US$0.7000 in the short term. Technical resistance is around $0.6870-0.6890.
An emergency summit held by the EU on Greece on Sunday, paying attention to whether a debt agreement can be reached by then. The interest rate decisions of central banks such as the Bank of Japan and the European Central Bank, as well as the upcoming economic data of various countries, are expected to affect the foreign exchange market trend next week.
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