Investing.com - The euro fell to fresh eleven-and-a-half year lows against the dollar on Friday after a strong U.S. jobs report underlined the diverging monetary policy stance between the Federal Reserve and the European Central Bank.
The Labor Department reported that the U.S. economy added 295,000 jobs in February, far more than the 240,000 forecast by economists. The unemployment rate ticked down to 5.5% from 5.7% in January, the lowest since May 2008. Economists had forecast the unemployment rate would fall to 5.6%.
The robust jobs report solidified expectations that the Federal Reserve will start raising interest rates around the middle of this year.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, jumped 1.39% to 97.74 late Friday, the highest since September 2003.
EUR/USD dropped 1.69% to 1.0841, a day after ECB Mario Draghi confirmed that it will begin purchasing euro zone government bonds on Monday under its new quantitative easing program.
The combined monthly asset purchases will amount to €60 billion per month and are expected to run until September 2016, or until the ECB sees that inflation is on a “sustained path” to its target of close to, but below, 2%.
Draghi also said that the ECB expects to see higher growth and inflation over the coming years.
The euro was also sharply lower against the yen, with EUR/JPY dropping 1.16% to 1130.96 in late trade, the weakest since January 26.
The single currency touched fresh seven-year lows against sterling, with EUR/GBP falling to 0.7184 before pulling back to 0.7211 in late trade.
In the week ahead, markets will be watching talks on Greece by euro zone finance ministers in Brussels on Monday, while Thursday’s U.S. retail sales report will also be closely watched for further indications on the strength of the recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 9
Eurogroup finance ministers are to hold a meeting in Brussels to discuss funding options for Greece.
Tuesday, March 10
In the euro zone, France is to publish a report on industrial production.
Wednesday, March 11
The U.S. is to publish a government report on crude oil inventories.
Thursday, March 12
The U.S. is to produce data on retail sales and initial jobless claims.
Friday, March 13
The U.S. is to round up the week with data on producer prices and consumer sentiment.