The euro dropped the most in more than a year against the yen as European Central Bank President Mario Draghi said policy makers would broaden asset purchases if the inflation outlook for the region slowed.
Currencies of commodity exporters including Australia and New Zealand climbed after China cut interest rates for the first time since 2012. Switzerland’s franc fell amid speculation the nation’s central bank is intervening to defend a 1.20-per-euro cap. Japan’s currency strengthened versus most of its 31 major peers, and pared a fifth straight weekly drop against the dollar, after Finance Minister Taro Aso said the currency had depreciated too rapidly. Brazil’s real rallied.
“The rhetoric from President Draghi suggests that the ECB is increasingly focused on the fall in inflation expectations,” said Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut. “The market reaction here shows that participants have further priced in the likelihood of a tweak to the ECB’s current policy stance.”