Euro at 2-year low vs dollar ahead of ECB meeting

By: 10 years ago

A woman walks past an exchange office in Moscow, on December 3, 2014. AFP

NEW YORK — The euro sank to a two-year low against the US dollar Wednesday ahead of a European Central Bank policy meeting that could move closer to expanded monetary easing.

The greenback was at $1.2308 per euro in late trade, a level last seen in July 2012, as weak growth in the eurozone pushed up prospects for a full-blown quantitative easing program by the ECB aimed at pushing down long-term rates and encouraging investment.

That could come as early as Thursday’s ECB meeting, but some analysts say the eurozone central bank could wait until the new year to launch into the broad-based bond purchases that comprise a QE program.

That eventual prospect is weighing down on the euro, said Boris Schlossberg of BK Asset Management.

“ECB President Mario Draghi still faces opposition from Germany and traders will be watching this Thursday’s ECB meeting very carefully,” he said.

“Several large banks including UBS have lowered their targets on the unit now, calling for a $1.1500 exchange rate on the prospect of massive QE program in the region expected to commence early next year.”

The British pound meanwhile gained slightly against the dollar as the Bank of England, also meeting Thursday, is expected to refrain from any policy changes.