Investing.com - The broadly weaker euro dropped to fresh 11-year lows against the dollar on Friday one day after the European Central Bank unveiled a large scale asset purchase plan, aimed at boosting slowing growth and inflation in the euro zone.
EUR/USD fell to 1.1118, the lowest since early September 2003 before pulling back to 1.1203 in late trade, still off 1.39% for the day. The euro ended the week down more than 3% against the dollar and has lost almost 7.5% so far this year.
The euro weakened across the board after ECB President Mario Draghi unveiled a €1.2 trillion quantitative easing program on Thursday. The central bank will purchase €60 billion per month of the region’s bonds, including first-time purchases of government debt, starting in March and continuing until September 2016.
Draghi said the program would help return inflation back to the ECB’s 2% target.
Expectations had been building ahead of the ECB meeting after official figures showed that the annual rate of inflation in the euro area fell into negative territory in December, dropping 0.2%.
Draghi acknowledged the action the ECB took last year was “insufficient” to ward off the threat of deflation.
EUR/GBP hit lows of 0.7428 on Friday, the weakest level since February 2008 and was at 0.7471 in late trade, ending the day down 1.31%, bringing the week’s losses to 2.15%.
EUR/JPY hit a 16-month low of 130.95 on Friday before recovering to 132.00 in late trade, still down 1.98%. The pair ended the week with losses of 2.91%.
The euro was also under pressure amid uncertainty over the outcome of Greek elections, due to be held on Sunday, with anti-bailout party Syriza leading in the polls.
The dollar remained broadly stronger, boosted by the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan.
The Bank of Japan held off from announcing fresh easing measures earlier in the week, despite cutting its inflation forecast for the year from April 2015, a move that reinforced expectations for further stimulus.
Speaking Friday, BoJ Governor Haruhiko Kuroda said it could examine fresh options if further stimulus was needed.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to more than 11-year highs of 95.77 on Friday and was last up 0.69% at 95.32.
In the coming week, investors will be focusing on Friday’s preliminary data on U.S. fourth quarter growth, while the latest euro zone inflation data is also due out on Friday. Wednesday’s monetary policy statement from the Federal Reserve will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 26
In Germany, the Ifo research group is to publish its report on business climate.
Tuesday, January 27
The U.S. is to release data on durable goods orders, as well as private sector reports on consumer confidence and new home sales.
Wednesday, January 28
In the euro zone, the Gfk Institute is to report on German consumer climate.
The Federal Reserve is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Thursday, January 29
In the euro zone, Germany is to release preliminary data on consumer inflation and a report on the change in the number of people unemployed.
Later Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as private sector data on pending home sales.
Friday, January 30
The euro zone is to release preliminary data on inflation as well as a report on the unemployment rate. Germany is to report on retail sales, while Spain is to release preliminary data on GDP growth and inflation.
The U.S. is to round up the week with preliminary data on fourth quarter growth as well as reports on business activity in the Chicago region and revised data on consumer sentiment.