The euro held onto earlier gains and consolidated above $1.32 for most of the Asian trading session on optimism for a successful Greek debt swap deal. By the end of the session, news came in that the level of voluntary private sector participation has exceeded 85 percent, meaning that Greece is safe from default.
However, the Greek government announced that it will use the collective action clauses to enforce the deal, which will result in pushing up the participation rate to 95 percent. This means forcing some investors to take part, meaning there could be a credit event. This would set the stage for more uncertainty again.
Euro fell across the board after the announcement, and many investors took the opportunity to sell to take profit. EURUSD fell to 1.3223 from the Thursday high of 1.3290. EURJPY fell to 107.74 from 108.63.
The dollar hit a 9-1/2-month high against the yen during the session, with USDJPY peaking at 81.88, only to drop to 81.45 after the debt swap news.
The Australian dollar has been range bound in the past two days, with AUDUSD stuck between 1.0616 and 1.0662. An unexpected drop in Australia’s trade deficit in January briefly weighed on the currency. Also, China’s retail sales and industrial output came in below forecast, reflecting slowing growth momentum, which is also negative for the aussie because China is Australia’s largest export market.
The focus turns to the much anticipated U.S. jobs data. The non-farm payroll report is the most widely watched report in the currency markets. Any increase in the numbers shows an improving labour market and signals a healthy U.S. economy, which is the largest global economy, and this is positive for risk currencies.