SYDNEY: The euro started the New Year at 29 month lows in Asia after the head of the European Central Bank fanned expectations it would take bolder steps on stimulus this month, underlining the US dollar’s rate advantage.
The latest lurch lower came after ECB head Mario Draghi said the central bank stood ready to respond to the risk of deflation. Consumer price data for the euro zone due on Jan. 7 is widely expected to show a fall in annual terms.
Draghi said we are in technical preparations to adjust the size, speed and compositions of our measures early 2015, should it become necessary, there is unanimity within the Governing Council on this.
The ECB council meets on Jan. 22 and markets are wagering heavily it will finally decide to start buying sovereign debt, following in the footstep of the UK, US and Japan.
The single currency skidded to $1.2054 EUR, depths last seen in mid 2012, while the dollar notched up a near nine year peak against a basket of major currencies.
The euro was now perilously close to its 2012 trough, and major chart support, at $1.2042. A break there would take it to territory not visited since June 2010.
Oil was also active on Friday as prices tried to rally on news of a larger than expected fall in US crude inventory and a fire at a major US supply facility.
