Next week, Greece is back in focus

Two events have taken centre stage this week with the ECB press conference combining with a substantially better than expected non - farm payroll report ( 295K vs. E xp. 235K, Prev. 257K, Rev. 239K , Net - 18K ) to send EUR/USD to 11 and a half year lows, with the USD index hitting 11 and a half year highs. Despite Draghi’s optimistic rhetoric and a positive GDP forecast, the release of CPI forecasts ( 2015 inflation at 0.0% from pr evious 0.7%, 2016 inflation at 1.5% from previous 1.3% and 2017 inflation at 1.8% ) was less optimistic as the key 'near 2%' target appears out of reach until after the scheduled end of QE. This led to the impression that monetary policy could remain accommodating for longer than previously thought, with QE potentially continuing past September 2016, thereby sending EUR/USD lower, and eventually breaking below the 1.1000 handle.

There was little reprieve for the pair on Friday, with the greenback cont inuing to extend on gains after non - farm payrolls report , sending EUR/USD below 1.0900 and the USD - index to its highest level since September 2003, with markets now pricing in the first hike in September 2015 despite both average hourly earnings and partic ipation rate printing lower than expected . The broad - based USD strength following the NFP report also saw USD/JPY break above the 121.00 handle, with commodity - linked currencies feeling the squeeze in a double - sided hit as the USD strength also weigh ed on oil prices and precious metals . 

Away from the ECB and Fed, this week remained busy in terms of central banks, with a number of other central banks also having rate decisions. Both the RBA and BoC resisted cutting their rates soon after previous cuts, seeing both commodity currencies experiencing bouts of strength. This comes despite the majority of surveyed analysts forecasting an RBA cut, while the BoE surprised few by holding their key rate for the 72nd consecutive decision. Elsewhere, the PBoC and R BI both cut rates, with the Polish Central Bank first cutting their key rate by 50 bps, only to later state that the period of loose monetary policy has ended , seeing the PLN pare back all original losses. 

Looking ahead to next week, Greece is back in focus with the Eurogroup meeting scheduled for Monday . Meanwhile, the Russian Central bank and RBNZ set for rate decisions, with both central banks seeing some analysts forecasting a cut in key rate.