Now that Greece has missed a repayment worth about 1.5 billion euros ($1.7 billion) that was due on Tuesday to the International Monetary Fund (IMF), all eyes are focused on the future of the euro and its impact in the international arena.
Greece’s default followed several months of negotiations with its creditors without reaching an agreement on how to resolve the country’s debts.
The effect of Grexit on the euro remains under debate with analysts ready to jump in with varying forecasts. Up until now, the euro has retained its position against the dollar but this may change. One representative at Goldman Sachs is calling for a near-parity with the dollar.
According to the bank’s analyst, "This week's jump in the euro on news of the Greek referendum made no sense to us. We continue to see mounting tensions over Greece as a catalyst for the euro-dollar to go near parity, if contagion to other peripherals causes the European Central Bank (ECB) to accelerate quantitative easing." He sees the euro dropping to 95 cents.
So far, the euro only dipped as low as around $1.096 on Monday from around $1.12 Friday, falling only slightly further on Wednesday, down to $1.1086, after peaking near $1.115 during the day.
US Non-Farm Payroll Report
Meanwhile, the release of US Non-Farm Payroll numbers due out today can have an immediate impact on the EUR/USD.
U.S. unemployment figures has always been a leading indicator of overall economic activity in the country. It measures the change in the number of newly employed people in the US, excluding workers in the farming industry. The report is usually released on the first Friday of the month, but has been brought up a day due to the Fourth of July holiday.
A reading which is higher than the market forecast is bullish for the dollar. However, overall sentiment seems to remain bearish. The ECB is continuing to print euros and rumors has it that it is still ready to step in and resolve the situation. At the same time, as U.S. growth data continues to be positive and the Fed is continuing to postpone an interest rate hike.
