Investing.com - The euro fell to two-month lows against the dollar on Friday one day after European Central Bank President Mario Draghi signaled that further monetary easing is likely later this year.
EUR/USD was down 0.79% to 1.1017 in late trade, the lowest close since August 18. For the week the pair tumbled 2.99%, the worst weekly performance since May.
The single currency fell to one-month lows against the yen, with EUR/JPY at 133.83 in late trade, ending the week with losses of 1.23%.
The drop in the euro came after Draghi said the ECB had discussed lowering the deposit rate at its meeting on Thursday and added that that the back could enlarge its asset purchase program or speed up bond purchases.
The comments underlined the diverging monetary policy stance between the Federal Reserve and central banks in the rest of the world. The Fed is currently expected to start hiking interest rates sometime in early 2016.
The dollar received an additional boost after China’s central bank unexpectedly cut interest rates on Friday. It was the sixth rate cut since last November, amid efforts by authorities to shore up slowing growth in the world’s second largest economy.
USD/JPY advanced 0.64% to 121.45 late Friday, the highest close since August 31. The pair gained 1.82% for the week.
The greenback also strengthened against the pound and the Swiss franc, with GBP/USD down 0.55% to 1.5308 and USD/CHF adding 0.54% to trade at 0.9783 late Friday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.78% to 97.18. The index ended the week with gains of 2.8%.
In the week ahead, investors will be focusing on Wednesday’s monetary policy announcement by the Federal Reserve for fresh indications on the timing of an initial rate hike.
Friday’s monetary policy announcement by the Bank of Japan will also be closely watched.
Market participants will also be awaiting preliminary estimates of third quarter growth from both the U.S. and the U.K.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 26
In the euro zone, the Ifo Institute is to report on German business climate.
The U.S. is to release data on new home sales.
Tuesday, October 27
New Zealand is to publish data on the trade balance.
The U.K. is to release preliminary data on third quarter economic growth.
The U.S. is to produce data on durable goods orders and consumer confidence.
Wednesday, October 28
Japan is to release data on retail sales.
Australia is to publish figures on consumer price inflation.
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.
Later in the day, New Zealand’s central bank is to announce its rate decision.
Thursday, October 29
Australia is to publish data on import prices.
In the euro area, Spain and Germany are to release preliminary data on inflation and Germany is to publish data on the change in the number of people unemployed.
The U.S. is to release advance data on third quarter economic growth, the weekly report on jobless claims and private sector data on pending home sales.
Friday, October 30
Japan is to produce figures on household spending, inflation and retail sales.
New Zealand is to release a report on business confidence.
Australia is to publish data on producer prices.
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The euro zone is to publish preliminary data on consumer inflation and unemployment and Germany is to release data on retail sales.
Canada is to publish its monthly report on economic growth.
The U.S. is to round up the week with data on personal income and spending and a report on manufacturing activity in the Chicago region.