Global Themes

A marked reduction in fears of an imminent Greek departure from the euro unleashed a wave of optimism that buoyed the euro and weighed on safer currencies like the U.S. dollar and yen. The latest reports suggested Greece and its lenders had found common ground in negotiations to extend the debt-laden nation a third rescue loan. Greece submitted a proposal for a three-year loan of €53.5 billion to help it shore up its tattered banking sector and government coffers. Although euro bulls were off and running Friday, a loan for Greece wasn’t yet a done deal, keeping the potential for today’s optimism to unravel if a deal isn’t reached by early next week. China, meanwhile, still lurked as a bigger potential threat to the world economy, though markets also took comfort Friday from another day of robust gains for Chinese equities. The euro soared to late June highs while the broadly weighted U.S. dollar index slumped to fresh July lows. Sterling in somewhat copycat fashion rode the euro’s coattails higher. Currencies today will take additional cues from Canada’s monthly jobs report and a lunchtime speech by Fed chair Janet Yellen on the U.S. economy.

AUD

Did your customer take advantage of the Aussie’s dollar’s fall to six-year lows this week? Levels remained juicy for U.S. companies, but the multiyear bargain ebbed Friday as hopes that Greece may soon win a much needed rescue loan buoyed risky, higher-yielding currencies. Any deal for Greece, though, would shine a brighter spotlight on China whose volatile stock market looms as a threat to global economy, a source of weakness for the Aussie.

GBP

The pound weakened against the resurgent euro but the single currency’s broad gains helped lift sterling against the dollar. The pound found a general positive in Britain’s tiniest trade deficit in two years with the monthly trade gap narrowing to £8.0 billion from a revised £9.4 billion shortfall. Expectations America’s central bank would boost its key rate before Britain’s still had the pound on track to end the week in the red against the dollar.

CAD

The loonie firmed above three-month lows after job losses in Canada last month proved fewer than expected which at the margin suggested a lower risk of a Bank of Canada rate cut as soon as July 15. Canada shed 6,400 jobs in June, not as bad as the loss of 10,000 markets had expected. Unemployment held at 6.8 percent, lower than forecasts of 6.9 percent. The overall quality of the report was mixed with all the job gains coming from the more meaningful full time positions. But the workforce declined.

USD

A mixed dollar posted big losses against the rejuvenated euro, but notched solid gains against the yen as hopes for an imminent Greek deal bolstered market optimism and risk tolerance. Dollar bulls should ultimately take comfort in a Greek deal for more cash as it would reduce global uncertainty and give the Fed more leeway to raise interest rates. Markets will be on alert for U.S. rate hike clues when the Fed chair speaks today at 12:30 p.m. ET.

EUR

48 hours away from a deal to keep Greece in the euro? Markets Friday gave that notion stronger consideration which helped the euro test what’s widely perceived to be limited upside. Should Greece soon find a momentary fit to its budgetary problems and stay in the euro, it would peel away a thick layer of uncertainty for the euro. The problem, though, is that it would expose a fundamental wound for the euro, the bloc’s weak economy which remains in need of the ECB’s strong policies of rock bottom interest rates, a big vulnerability for the euro. Greece still had to seal the deal and until it does the euro would be at risk of quickly unwinding its Friday appreciation.