U.S. Session Forex Recap – July 14, 2015

  • US budget balance: 51.8B USD vs. 38B USD expected, -82.4B USD previous
  • EUR, other high-yielding currencies lose ground as optimism on new Greek deal wanes
  • AU NAB business confidence report due today

Up, up, and…nope. Risk aversion moved the major currencies around during the U.S. session, as forex traders digested what the new deal for Greece actually meant.

The biggest story of the hour was the deal that Greek PM Tsipras negotiated with the rest of the euro region. Take note that an actual bailout deal hasn’t been reached yet. Instead, Greece’s creditors came up with a set of conditions for Greece to follow if Tsipras wants the negotiations to continue.

Unfortunately for the Greeks (and the euro), the conditions look a lot similar to the ones rejected in the recent Greek referendum. For starters, it includes higher taxes, pension cuts, and a separate independent fund for debt repayment. Talk about driving a hard bargain!

The latest deal presents more headaches for the euro not only because they’re steep, but also because the government might not even have the capacity to fulfill them. Some Greek voters are already back in the streets protesting the deal while some are already calling for Tsipras’ resignation. Heck, the Greek Parliament might not even approve of the deal themselves! The uncertainty surrounding the new deal is probably why the optimism that was so abundant in the London session petered out pretty quickly.

The euro took most of the hit with EUR/USD falling by 68 pips (-0.61%) to 1.0998, EUR/JPY sliding by 81 pips (-0.59%) to 135.75, and EUR/GBP dropping by 23 pips (-0.32%) to .7101.

Not surprisingly, forex traders once again turned to the low-yielding Greenback when faced with uncertainty. USD/JPY popped up by another 4 pips (+0.03%) to 123.43 while GBP/USD fell by 48 pips (+0.31%) to 1.5488 and USD/CHF rose by 22 pips (+0.23%) to .9501.

Even the comdolls lost pips on the dollar. Of course, it might have helped the comdoll bears that the value of commodities like gold and oil also weakened yesterday. AUD/USD lost 24 pips (-0.32%) to .7408 and NZD/USD inched 15 pips lower (-0.22%) to .6695. The Loonie, hit hard by lower oil prices and threats of more oil supply from Iran, lost 26 pips (-0.20%) to 1.2741.

Will we see more comdoll bears in the pip streets today? Asian session forex traders don’t have a lot on their plate with only Australia’s NAB business confidence report on the table. The release doesn’t usually cause sustained moves in the markets, so you might want to keep an eye out for extensions or a bit of profit-taking from yesterday’s price action.

Good luck!

See also:

London Session Recap

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