On Tuesday the euro approached a nine-year low versus
the greenback as European Central Bank officials fueled speculation
the institution will start a program of government-bond buying
as early as next week to battle deflation.
The yen stepped off its strongest level in four weeks
against the dollar amid speculation Japan will proceed with
currency-weakening stimulus measures.
The pound fell against all of its 16 major peers before a report economists said will show the U.K.’s inflation rate slipped below 1 percent last month. The British currency fell 0.3 percent to $1.5120 and weakened 0.2 percent to 78.14 pence per euro.
Goldman Sachs Group Inc. raised its forecast for the dollar against the euro, citing a diverging growth outlook between the U.S. and Europe.
The euro dropped 0.2 percent to $1.1814 as of 9:25 a.m. London time after sliding to $1.1754 on Jan. 8, the weakest level since December 2005. Europe’s common currency gained 0.1 percent to 139.87 yen. The euro has fallen 2.1 percent in the past month against nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes, while the dollar gained 3.8 percent, reflecting the divergence in policy outlook between the ECB and the Federal Reserve.
The yen was little changed at 118.39 per dollar after appreciating to 117.74, the strongest level since Dec. 17.
The ECB is “in a position to take a decision on Jan. 22” even as that “doesn’t necessarily have to mean that we will actually take a decision,” Executive Board member Benoit Coeure was quoted as saying in an interview with Die Welt. Governing Council member Ewald Nowotny said during a panel discussion late yesterday in Vienna that policy makers must treat the threat of deflation seriously and shouldn’t delay a response.
