Investing.com - The euro was sharply lower against the dollar on Friday after comments by European Central Bank President Mario Draghi indicated that it is moving closer to implementing quantitative easing measures to shore up the euro area economy.
EUR/USD was down 1.19% to two-week lows of 1.2391 late Friday and ended the week with losses of 1.04%.
The drop in the euro came after Draghi warned that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program to raise inflation and inflation expectations as quickly as possible
“We will continue to meet our responsibility, we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us," Draghi said.
“If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases,” he added.
The annual rate on inflation in the euro area was 0.4% in October, well below the ECB’s target of close to but just under 2%.
The single currency also weakened against the yen and the pound, with EUR/JPY down 1.52% to 145.97 and EUR/GBP falling 0.98% to 0.7912 in late trade.
Draghi’s warning came as China’s central bank unexpectedly cut interest rates for the first time in more than two years on Friday. The move came in response to recent signs of a slowdown in the world’s second-largest economy.
Demand for the dollar continued to remain underpinned after the minutes of the Federal Reserve’s latest meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth.
However, the minutes offered little additional clarity about when rates could start to rise. Markets are currently expecting the U.S. central bank to start raising rates sometime around September 2015.
In the week ahead, investors will be looking ahead to Friday’s preliminary report on euro zone inflation. The U.S. is to release a string of economic reports on Wednesday ahead of Thursday’s Thanksgiving holiday, including reports on unemployment claims and durable goods orders.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 24
The Ifo Institute is to release its report on German business climate.
Tuesday, November 25
The U.S. is to release revised data on third quarter gross domestic product and a report on consumer confidence.
Wednesday, November 26
The U.S. is to release a flurry of data ahead of Thursday’s holiday, including reports on durable goods orders, unemployment claims, personal income and spending, as well as reports on new and pending home sales and revised data on consumer sentiment.
Thursday, November 27
In the euro zone, Germany and Spain are to release preliminary data on consumer price inflation. Germany is also to produce data on employment change and consumer climate.
Markets in the U.S. are to remain closed for the Thanksgiving Holiday.
Friday, November 28
The euro zone is to release what will be closely watched preliminary data on the consumer price index as well as a report on the unemployment rate, while Germany is to release data on retail sales.