Investing.com - The euro dropped sharply against the dollar and the yen on Friday after European Central Bank President Mario Draghi indicated that it is moving closer to quantitative easing, while the yen moved higher against the dollar following comments by Japan’s finance minister.
EUR/USD was down 1.19% to two-week lows of 1.2391 late Friday and ended the week with losses of 1.04%. EUR/JPY fell 1.52% to 145.97 in late trade.
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
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 dollar ended the day lower against the yen on Friday after Japan’s Finance Minister Taro Aso voiced concerns over the weaker yen, saying the speed of the currency’s recent decline against the dollar was “too fast.”
USD/JPY was down 0.33% to 117.77 in late trade, after falling to lows of 117.36 immediately following the comments. On Thursday the pair rose to highs of 118.96, the most since August 2007.
The yen has weakened broadly since the Bank of Japan unexpectedly expanded its stimulus program late last month. In contrast the Federal Reserve wound up its asset purchase program last month is expected to start raising rates around September 2015.
Elsewhere Friday, the commodity linked currencies were boosted after China’s central bank unexpectedly cut interest rates for the first time in more than two years.
The move came in response to recent signs of a slowdown in the world’s second-largest economy and boosted the demand outlook for raw materials.
AUD/USD was up 0.61% to 0.8668 in late trade, while NZD/USD rose 0.16% to 0.7877. The greenback fell to a three week low against the Canadian dollar, with USD/CAD down 0.63% to 1.1231.
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 a look at unemployment claims and durable goods orders. Tuesday’s speech by Bank of Japan Governor Haruhiko Kuroda 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, November 24
Markets in Japan are to remain closed for a national holiday.
Switzerland is to release data on the employment level.
The Ifo Institute is to release its report on German business climate.
Tuesday, November 25
The BoJ is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Later in the day, BoJ Governor Haruhiko Kuroda is to speak; his comments will be closely watched.
New Zealand is to release data on inflation expectations.
The U.K. is to release private sector data on mortgage approvals. Also, Bank of England Governor Mark Carney is to testify before Parliaments Treasury Committee.
Canada is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
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.K. is to produce revised data on third quarter GDP. The country is also to release preliminary data on business investment and private sector data on retail sales.
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
Australia is to release data on private capital expenditure.
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.
Canada is to publish data on the current account.
Later Thursday, New Zealand is to publish a report on building consents.
Friday, November 28
Japan is to produce reports on inflation, household spending, retail sales and preliminary data on industrial production.
New Zealand is to publish a private sector report on business confidence.
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.
The U.K. is to publish private sector data on house price inflation.
Elsewhere in Europe, Switzerland is to publish its KOF economic barometer.
Canada is to round up the week with its monthly GDP report.