The euro on Monday hit almost nine-year low level against the US dollar as the global investors initiated betting on the quantitative easing policy by the European Central Bank (ECB) and the soft manufacturing surveys brought the shares down and sent the crude oil prices to nearly 6-year (or 5 1/2-year) lows.
The euro dropped to its weakest level since March 2006 to as low as USD 1.18605. The Euro Zone currency last traded at USD 1.1926, a drop of 0.6 percent, from late US trade on Friday.
On the other hand, the European shares are also expected to fall, as Britain’s FTSE witnessed falling by up to 0.4 percent and Germany’s DAX and France’s CAC seen dropping as much as 0.2 percent.
ECB President Mario Draghi had said in an interview with German financial daily Handelsblatt (which was published on Friday) that the risk of the European Central Bank not accomplishing its mandate of preserving price stability is looming larger than it was half a year ago.
Commenting upon Draghi’s remarks, Barclays’ chief forex strategist Shin Kadota said, “The market took his comments to mean that he is ready to adopt quantitative easing.”
The financial analysts and economists made forecast that the Euro Zone inflation data (released on Wednesday) will show that the prices dropped 0.1 percent in December, which is the first fall since 2009.
Market watchers believe that this could compel the ECB to ease its policy as soon as January 22, when it will be holding its first policy meeting in the New Year 2015.
The US, which is considered as one of the bright spot in the world economy, witnessed a slowdown in the pace of growth in its manufacturing sector in December.
That led the Wall Street shares end mostly flat during the first trading day in 2015 on Friday.
Oil prices hit a nearly 6-year (or 5-1/2-year) low as growth concerns raised the fears of a supply glut globally.
On the other hand, the Brent crude futures also declined as low as USD 55.36 a barrel, also its lowest level since May 2009, before edging back to USD 55.42, still down a US dollar.
The greenback also emerged stronger against the Swiss franc and sterling, extending a latest bull run as markets betted a relatively healthy American economy that will offer enough room for the rate hike by the Federal Reserve in the middle of this year.