Continued quiet on the domestic front is likely to see external forces as the dominant driver of Australian Dollar price action in the week ahead.
The spotlight initially falls on Greece. The Greek government submitted a list of proposed reforms that it hopes will unlock the next round of bailout funding.
Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the eurozone. Such an outcome would be unprecedented, carrying with it as-yet unknown implications for the financial markets at large.
Avoiding that trajectory with an accord that keeps Greece within the currency bloc is likely to prove supportive for risk appetite as well as the Aussie dollar. Needless to say, failing to reach a deal stands to produce the opposite response.
Greece sent an updated list of reforms to lenders this week to try to unlock financial aid and avoid a default, but euro zone officials said more work was still needed before new funds could be released.
Greece is weeks away from running out of cash but its eurozone and International Monetary Fund lenders have frozen support payments until it implements reforms, with talks bogged down over what measures the leftist-led government must take.
“We sent a new document today to the Brussels Group (of EU/IMF lenders) which is more specific and quantified,” a Greek finance ministry official told reporters, noting that labor and pension reform were the main sticking points in negotiations.
Euro zone officials said, however, that institutions representing the lenders – the European Commission, the European Central Bank and the IMF, got the list too late for it to be discussed by euro zone deputy finance ministers at a teleconference on Greece on Wednesday afternoon.
One euro zone official familiar with the content of the call said recent talks on the reforms had made progress but that more work was needed for a deal.
EU officials confirmed the new reform list, published by the Financial Times was genuine, but noted it still needed more work.
The 26-page document states clearly that Greece considers itself an irrevocable member of the single currency area, making clear it had no intention of exiting the euro zone or the European Union.
It says that the country’s financing needs in 2015 are 19 billion euros ($20 billion). It expects to get 1.5 billion euros from selling off state assets, a far cry from the 4 billion envisaged by the agreement with the previous government.
The government pledges to crack down on tax fraud, raise tax on luxuries and review asset sales on a case-by-case basis. It also proposes reintroducing an extra payment for poor pensioners and a gradual hike in the minimum wage and retaining government administration staffing levels.
Discussions on the reforms between Greece and the representatives of the creditors are scheduled to continue next week, officials said.
A payment to the IMF of about 430 million euros due next week is shaping up to be the next financial test for Greece, which is already resorting to last-ditch measures like borrowing from state entities to tide it through the cash crunch.
In an interview with German daily Der Spiegel, Interior Minister Nikos Voutsis said that if foreign creditors do not send Athens further funds by April 9, the government would first pay salaries and pensions and then come to an agreement with lenders on paying the IMF late.
But Prime Minister Alexis Tsipras’s government, which was elected in January on promises to ease the terms of the bailout and cut debt, said the comments did not represent its stance.
“There is no chance that Greece will not meet its obligations to the IMF on April 9,” government spokesman Gabriel Sakellaridis told Reuters.
Labour Minister Panos Skourletis said a planned visit by Tsipras to Moscow next week was “to find out whether our historic friendship with Russia can be stretched to other levels”, German newspaper Die Zeit reported.
“We’d like to stay on the ship called Europe,” Skourletis was quoted as saying. “But if the captain pushes us overboard, we need to try to swim.”
But Athens would only reveal what role Russia might play “if nothing works anymore”, Skourletis said.
Earlier, Economy Minister George Stathakis said he expected an agreement with lenders next week on a package of reforms submitted by Athens to help unlock remaining bailout funds.
The list proposed by Athens includes including the leasing of 14 regional airports and the sale of Greece’s largest port, Piraeus, to raise 1.5 billion euros this year, although ministers have made conflicting statements on the port sale.