Investing.com - The euro fell to four-and-a-half year lows against the dollar on Friday, and the greenback rose to parity against the Swiss franc after European Central Bank President Mario Draghi indicated that the likelihood of quantitative easing has increased.
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 bank is moving closer to implementing quantitative easing measures 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%.
EUR/USD was down 0.85% to 1.2002 in late trade, the weakest level since early June 2010.
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.
The SNB eased monetary policy in December, when it imposed negative interest rates on commercial bank deposits.
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.
Elsewhere, sterling fell to 17-month lows after data showed that U.K. manufacturing growth slowed in December.
GBP/USD was off 1.61% at 1.5326 late Friday after a report showed that the U.K. manufacturing index unexpectedly slid to a three-month low in December.
The dollar was also higher against the yen, with USD/JPY up 0.62% to 120.49 in late trade.
USD/CAD hit five-and-a-half year highs, rallying 1.44% to 1.1784 late Friday as lower oil prices continued to pressure the commodity-exposed loonie lower.
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 prices.
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.
The U.K. is to release data on construction sector activity.
Tuesday, January 6
Australia is to produce data on the trade balance.
Elsewhere, China is to publish its HSBC service sector index.
The U.K. is to publish a report on service sector activity.
Later in the day, 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 SNB is to publish a report on foreign currency reserves.
The U.S. is to release a report on ADP nonfarm payrolls, in addition to data on the trade balance.
Canada is also to report on its trade balance and publish its Ivey PMI.
Later Wednesday, the Federal Reserve is to publish the minutes of its most recent meeting.
Thursday, January 8
Australia is to release data on building approvals.
The euro zone is to publish a report on retail sales.
The Bank of England is to announce its monetary policy decision.
The U.S. is to produce its weekly report on initial jobless claims.
New Zealand is to publish data on building consents.
Friday, January 9
Australia is to publish data on retail sales.
China is to release data on consumer price inflation.
The U.K. is to produce a report on industrial and manufacturing production, as well as data on the trade balance.
Canada is to report on building permits and the change in the number of people employed and the unemployment rate.
The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.