The euro traded near the lowest in more than three months before data tomorrow on German retail sales and Spanish inflation that may back the case for additional stimulus from the European Central Bank.
The euro was set for its biggest monthly drop since February 2013 before ECB Governing Council member Carlos Costa speaks tomorrow, and after Executive Board member Yves Mersch said yesterday officials are “comfortable” with conventional and unconventional measures. The Bloomberg Dollar Spot Index is set for its first monthly gain since January before data that may show initial jobless claims fell. Australia’s dollar rose after a report showed capital expenditure plans that Commonwealth Bank of Australia said exceeded analysts’ estimates.
“I would sell euro on rallies amid heightened expectations for next week’s ECB meeting,” said Masato Yanagiya, the head of foreign exchange and money trading in New York at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “Further downside to the euro would be difficult if the ECB just cuts rates. We would need extra measures such as a lending program or some sort of asset purchase program to test lower.”