GBP

Sterling squandered a six-week high against the greenback, a currency that benefited from markets’ frayed nerves over Greece and news that U.K. consumers held tighter to their wallets than expected. British retail sales fell 0.3 percent in January, a slightly bigger decline than expected which tempered recent optimism about recovery in Europe’s third biggest economy. One of the next big events on the radar to drive the pound will be revised U.K. growth figures for the fourth quarter on Feb. 26. Growth is seen going an unrevised 0.5 percent for last quarter. Any surprise upward revision to growth could see the pound rise to fresh highs for the year around $1.56. GBP buyers should consider taking advantage of the dollar’s slim gain on the year against the pound which has receded markedly in recent weeks.

EUR

Growing unease about Greece’s future in the euro zone weighed on the single currency which fell to its lowest in more than a week and closer to recent 11- year lows. The euro looked poised to soon explode out of a confined range, though uncertainty remained over which direction. For it to strengthen, markets want to hear constructive news of a compromise deal between Athens, Germany and the rest of the euro zone that keeps the Mediterranean nation fiscally afloat for the foreseeable future. However, should the ticking clock expire with no deal in place for Greece, the euro would be at risk of accelerated depreciation that could quickly take it to or below recent lows around $1.11. Preliminary manufacturing PMIs from the euro zone, Germany and France all printed below forecast; highlighting the precarious shape of recovery which could be dealt a big setback should Greece depart the euro.

The greenback moved toward the stronger end of its recent narrow range, benefiting from market risks related to Greece and still alive prospects for the Fed to boost interest rates as early as the summer. The buck has recently settled into a confined range as mixed data and dovish minutes from the Fed’s previous meeting have tempered expectations for a Fed rate hike anytime soon. But the market seems inclined to take the cautious Fed minutes with a grain of salt since they didn’t capture recent jobs data that have shown more signs of strength. January hiring proved stronger than expected while this week’s jobless claims improved more than forecast and dipped comfortably below 300,000, auguring well for the next monthly employment report. Consequently, a midyear move by the Fed is still seen plausible, underpinning the greenback. Fed policy will be front and centre for markets next week when chair Janet Yellen delivers her twice yearly economic testimony on Capitol Hill on Tuesday and Wednesday. What the tone of Ms. Yellen’s remarks suggests about the arrival of a rate hike will be of critical importance for the dollar.

CAD

The biggest plunge in local retail spending in years weighed on the loonie and had it pennies away from recent six-year lows. Lower gas prices were mostly behind the 2 percent tumble in Canadian retail sales in December which marked the largest fall since April 2010. The disappointing outcome will add more fuel to expectations the Bank of Canada may soon cut borrowing rates further to shore up the commodity-dependent economy. The weaker loonie makes for a more affordable market for CAD buyers. U.S. importers find an even better deal on forwards which are priced at a discount since Canada’s base rate at 0.75 percent is above comparable U.S. rates near zero.