A four month extension to the Greek bailout was agreed to this week after the Greek government introduced a new reform plan which was agreed to by European finance ministers. Concerns surrounding upcoming funding problems persist, however. A Greek payment of nearly €2bn in March and then repayments amounting to nearly €7bn are expected in summer. As short-term fears of an immediate Greek exit eased, attention swung to FOMC’s testimony by Janet Yellen to both houses of Congress. The testimony outlining the strength of the US economy revealed a patient Fed, but one that was also reliant upon upcoming economic data. Economic data in the eurozone generally appeared to be more positive than expected, while there were some fears of weakening in the US. The sterling continued to benefit from safe haven flows out of the eurozone allowing it to trade at fresh seven-year highs against the euro. The sterling’s move higher also found support by the Bank of England’s Governor, who reminded markets this week he was looking through short-term dips in inflation. The Swiss franc experienced an extension to its downtrend seen over the course of the last few weeks. A Ukraine ceasefire, the passing of a Swiss tax agreement with Italy, better-than-expected data out of China supportive of the global growth outlook and US officials investigating large banks, including Swiss, over a metals price fixing scandal, all tarnished the safe-haven currency.

Euro

Getting past the immediate threat of a Greek exit helped lift the euro at the beginning of the week, but economic data helped the euro maintain higher levels within recent ranges. A German IFO business sentiment survey was released below forecast, which was disappointing, but still eked out four consecutive months of growth. European Central Bank’s president Mario Draghi reminded markets that it will unleash its Quantitative Easing programme next month, but given this has already been priced into markets, the reminder had little impact.

Sterling

The sterling pushed to new seven-year highs against the euro and moved higher against the US dollar. Economic data may not have helped the local currency, but comments from the BoE’s Governor did. Governor Mark Carney reminded markets that inflation figures were primarily being weakened by one-off reasons that he was willing to look past. The less dovish comments pushed the sterling higher, where it was able to maintain higher levels despite CBI distributive trades that suggested consumer demand weakened to a point not seen since November 2013.

US dollar

The highlight for this week in the US was FOMC’s Janet Yellen’s testimony on the health of the economy and monetary policy. Yellen initially supported the dollar by saying that any altered wording to forward guidance in the Fed’s statement would suggest a rate increase was on the table for discussion. Upon further examination of her comments, markets decided that the statement was less hawkish as initially interpreted, which helped to weaken the dollar.

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