The euro tumbled to near a nine-year low on Monday, undercut by growing concerns that Greek parliamentary elections will result in a left-wing government that will aim to cancel austerity measures along with a big portion of Greece’s debt. Expectations for monetary policy easing in the euro zone, the opposite of a trend toward tightening policy in the United States, also cast a pall over the euro. The euro traded as low as $1.18605 on the EBS trading platform in early Asian trade before steadying at $1.19445, a loss of 0.48 percent. The euro’s decline coincides with data showing German inflation slowed to its lowest levels in over five years in December. That raises pressure on European Central Bank President Mario Draghi to unveil unconventional measures to ward off a deflationary spiral. Against the yen, the euro hit a two-month low of 142.27 yen before stabilizing around 142.81 yen, a loss of 1.25 percent on the day. The dollar dropped 0.73 percent to 119.60 yen. Sterling was down 0.48 percent at $1.5252, having earlier fallen to a 17-month low of $1.5199 in New York trade. Against the Swiss currency, the dollar rose to a more than four-year high of 1.0108 Swiss franc.
The U.S. dollar surged broadly against most major currencies pushed as the euro dropped to its lowest level since early 2006, spurred by rising political concerns in Europe ahead of elections in Greece and expectations of easier monetary policy in the euro zone. The dollar index, which measures the greenback against a basket of currencies, hit a nine-year high of 91.775 before easing to 91.342, still up 0.30 percent on the day.
The Canadian dollar strengthened on Monday despite a collapse of oil prices below $50 a barrel and a U.S. dollar rally that showed no sign of abating.
Read the full report: FX Daily