Investing.com - The euro fell to four-and-a-half year lows against the dollar on Friday after European Central Bank President Mario Draghi signaled that it would implement quantitative easing measures early this year.
EUR/USD was down 0.85% to 1.2002 in late trade, the weakest level since early June 2010.
In an interview with German financial newspaper Handelsblatt Draghi said the risk of the ECB not fulfilling its mandate of price stability is higher now than six months ago. The remarks indicated that the central will expand its asset-purchase program to include government debt in order to spur growth and inflation.
The annual rate of euro zone inflation was just 0.3% in November, well below the ECB’s target of close to but just below 2%.
The single currency was also pressured lower after data showed that manufacturing activity in the euro area grew at a slower rate than initially estimated in December, adding to concerns over the outlook for fourth quarter growth.
The dollar rose to parity against the Swiss franc for the first time since December 2010, as weakness in the euro added to pressure on the Swiss National Bank to defend its 1.20 per euro exchange rate floor. USD/CHF was up 0.83% to 1.0014 in late trade.
Switzerland’s central bank imposed the exchange rate floor in September 2011 to head off the threat of deflation and protect the country's exporters from a rapidly rising currency.
The SNB eased monetary policy in December, when it imposed negative interest rates on commercial bank deposits, in a bid to prevent the continued appreciation of the Swiss franc against the euro.
EUR/CHF was almost unchanged at 1.2019 in late trade.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, advanced 0.91% to nine-year peaks of 91.47. The index rallied 12% in 2014, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.
In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched, while the euro zone is to publish preliminary data on consumer inflation.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 5
In the euro zone, Germany is to publish preliminary data on consumer price inflation, while Spain is to report on the change in the number of people employed.
Tuesday, January 6
In the U.S., the Institute of Supply Management is to release data on non-manufacturing activity.
Wednesday, January 7
Germany is to publish data on retail sales, as well as a report on the change in the number of people employed. The euro zone is to release preliminary data on consumer inflation and a report on the unemployment rate.
The U.S. is to release a report on ADP nonfarm payrolls, in addition to data on the trade balance. Later Wednesday, the Federal Reserve is to publish the minutes of its most recent meeting.
Thursday, January 8
The euro zone is to publish a report on retail sales.
The U.S. is to produce its weekly report on initial jobless claims.
Friday, January 9
The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.