The Euro Falls on Expectations the ECB Will Signal Lower Rates

“The euro declined toward a three-week low against the dollar amid speculation the European Central Bank will signal it is open to cutting its benchmark rate when policy makers meet this week.

Europe’s shared currency declined versus 13 of its 16 major counterparts after a report showed producer-price inflation in the euro-area slowed more in November than economists forecast. The yen strengthened from near the weakest level since July 2010 against the dollar even amid media reports that the government will announce additional stimulus measures.

“The ECB meeting will be the focus this week,” said Jane Foley, a senior currency strategist at Rabobank International inLondon. “If there is more speculation about the ECB cuttinginterest rates that could undermine the euro against the dollar.”

The euro dropped 0.2 percent to $1.3041 at 11:01 a.m. London time after falling to $1.2998 on Jan. 4, the lowest level since Dec. 12. The single currency fell 0.5 percent to 114.63 yen.Japan’s currency strengthened 0.3 percent to 87.90 per dollar after depreciating to 88.41 on Jan. 4, the weakest since July 15, 2010.

ECB President Mario Draghi’s Governing Council, which cut economic and inflation projections last month, will keep its benchmark refinancing rate at a record low of 0.75 percent on Jan. 10, according to a Bloomberg News survey of 55 economists. Five predict the central bank will reduce the benchmark rate to 0.5 percent….”

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