Bulletin

Euro slides after Draghi hints QE is imminent

The euro fell to $1.2026 on Friday, its weakest level since June 2010, as investors anticipated that the European Central Bank is poised to launch quantitative easing soon. Expectations have risen that the ECB may soon back a sovereign debt QE stimulus package after comments by ECB president Mario Draghi in an interview with German newspaper Handelsblatt. Draghi told the paper the risk that the Bank would not fulfil its mandate to keep prices stable was greater than six months ago, adding that the ECB was prepared to act against eurozone deflation if necessary. German government ten-year borrowing costs fell to a record low of 0.534% and yields on five-year paper went negative for the first time amid growing expectations that the ECB will implement quantitative easing. Markit said the latest factory output data suggested that the eurozone was on course for growth of just 0.1% in the final quarter of 2014.

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