Euro Slides to Weakest Since 2006 on ECB, Greece.

http://www.bloomberg.com/news/2015-01-04/euro-drops-to-lowest-since-march-2006-as-ecb-splitting-from-fed.html

The euro fell to the weakest level in almost nine years versus the dollar amid speculation the European Central Bank is moving closer to large-scale sovereign-bond purchases.

The shared currency slid as much as 1.2 percent today after President Mario Draghi last week gave his clearest signal the ECB will start quantitative easing. The euro also weakened as Greece began an election campaign that Prime Minister Antonis Samaras said will determine the country’s euro membership. A dollar gauge headed for its highest close in almost six years as the Federal Reserve moves toward raising interest rates. New Zealand’s dollar and Norway’s krone fell as commodities dropped.

“It’s very hard to imagine something that can convince the market that the euro is not a selling opportunity at this juncture,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “The market continues to speculate that the ECB will start QE this month. Clearly the election in Greece probably complicates the agenda for Draghi.”

The euro dropped 0.4 percent to $1.1959 as of 8:56 a.m. London time after sliding to $1.1864, the least since March 2006. The shared currency fell 0.5 percent to 143.92 yen after declining to 143.16, the lowest since Nov. 11. The dollar depreciated 0.2 percent to 120.32 yen.

Draghi said policy makers were ready to act if needed to counter deflation, in an interview with German newspaper Handelsblatt published Jan. 2. The ECB next meets Jan. 22.

Nailed Down’

“The euro remained firmly out of favor as markets bank on details of upcoming ECB quantitative easing being nailed down as soon as Jan. 22,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a note to clients. The dollar is poised to extend gains as “roadblocks are expected to be few and far between on a journey towards a higher Fed Funds rate,” she said.

The yen rose to an eight-week high against the euro as a slide in Asian stocks boosted demand for haven assets.

“There are concerns for risk-off trades” and that is driving the yen higher, said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. Germany is starting to suggest that Greece may leave the euro, and “those sort of uncertainties are behind the trades,” he said.

The kiwi fell 0.6 percent to 76.57 U.S. cents and the krone weakened 0.5 percent to 7.6292 per dollar. Oil declined for a third day after the Bloomberg Commodity Index slumped 17 percent last year, the worst performance since 2008.

JPMorgan Chase & Co.’s Global FX Volatility Index climbed to the highest since September 2013. The gauge rose 10 basis points to 10.14 percent after climbing to 10.27 percent. It has increased from a record-low 5.28 percent set in July.

South Korea’s won dropped for a third day as BNP Paribas SA said disinflationary pressures were keeping alive the possibility the Bank of Korea will cut interest rates in the first quarter.

The won depreciated 0.6 percent to close at 1,109.69 per dollar in Seoul and touched 1,111.70, the weakest level since Dec. 9.