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Forex - Weekly outlook: January 26 - 30

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Investing.com -

Investing.com - The euro fell to fresh 11-year lows against the dollar on Friday and hit a seven year trough against the pound, a day after the European Central Bank launched a large scale quantitative easing program to combat slowing growth and inflation in the euro area.

EUR/USD hit lows of 1.1118, the weakest since early September 2003 and was at 1.1203 late Friday, off 1.39% for the day. The euro ended the week down more than 3% against the dollar and the pair has lost almost 7.5% so far this year.

The drop in the single currency came after ECB President Mario Draghi unveiled a €1.2 trillion asset purchase program on Thursday. The central bank will purchase €60 billion in assets per month, starting in March and continuing until late 2016.

Draghi said the program would help return inflation back to the bank's 2% target. Expectations had been building ahead of the ECB meeting after official figures showed that the annual rate of inflation in the euro area fell into negative territory in December, dropping 0.2%.

Draghi acknowledged the action the ECB took last year was "insufficient" to ward off the threat of deflation in the region.

EUR/GBP hit lows of 0.7428 on Friday, the lowest since February 2008 and was at 0.7471 in late trade, ending the day down 1.31% and bringing the week's losses to 2.15%.

EUR/JPY hit a 16-month low of 130.95 on Friday and settled at 132.00, down 1.98%. The pair ended the week down 2.91%.

The euro was also under pressure amid uncertainty over the outcome of Greek elections, due to be held on Sunday, with anti-bailout party Syriza leading in the polls.

The dollar remained broadly stronger, boosted by the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, rose to more than 11-year highs of 95.77 on Friday and was last up 0.69% at 95.32.

The dollar slid lower against the safe haven yen, with USD/JPY down 0.61% to 117.78 in late trade, amid weakness in U.S. equities following lackluster corporate earnings results.

The Bank of Japan held off on expanding its monetary easing scheme on Wednesday and instead expanded a loan scheme aimed at boosting lending.

In the week ahead, investors will be focusing on Friday's preliminary data on fourth quarter growth, while the latest euro zone inflation data is also due out on Friday. Wednesday's Federal Reserve monetary policy statement will be closely watched, while New Zealand's central bank is also to hold a policy meeting.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, January 26

The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank's perspective.

Japan is also to publish data on the trade balance.

In Germany, the Ifo research group is to publish its report on business climate.

The U.K. is to release private sector data on mortgage approvals.

Tuesday, January 27

New Zealand is to publish private sector data on business confidence.

The U.K. is to publish preliminary data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy's health.

The U.S. is to release data on durable goods orders, as well as private sector reports on consumer confidence and new home sales.

Wednesday, January 28

Australia is to produce data on consumer inflation, which accounts for the majority of overall inflation.

In the euro zone, the Gfk Institute is to report on German consumer climate.

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, the Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement. The country is also to release data on the trade balance.

Thursday, January 29

Japan is to publish data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Australia is to publish a report on import prices.

The U.K. is to publish private sector reports on house price inflation and retail sales.

In the euro zone, Germany is to release preliminary data on consumer inflation and a report on the change in the number of people unemployed.

Later Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as private sector data on pending home sales.

Friday, January 30

Japan is to release a string of data, including reports on household spending and inflation and preliminary data on industrial production.

Australia is to publish data on producer price inflation.

The euro zone is to release preliminary data on inflation as well as a report on the unemployment rate. Germany is to report on retail sales, while Spain is to release preliminary data on GDP growth and inflation.

Switzerland is to publish its KOF economic barometer.

The U.K. is to release data on net lending.

Canada is to publish its monthly GDP report.

The U.S. is to round up the week with preliminary data on fourth quarter growth as well as reports on business activity in the Chicago region and revised data on consumer sentiment.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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