The euro reached the lowest level in almost a year against the dollar as signs the region’s economy is underperforming that of the U.S. damped demand for the shared currency.
Large speculators including hedge funds last week increased bets on drops in the euro versus the dollar to the most since July 2012. A report today showed euro-area manufacturing expanded at a slower pace than initially estimated, adding to the case for the European Central Bank to expand stimulus. The yen declined against all of its major counterparts before the Bank of Japan delivers its Monetary Policy Statement this week. Russia’s ruble slid to a record low.
“We’ve been maintaining a bearish view on the euro for some time,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “The presumptions in that, in terms of the deteriorating fundamentals and that the ECB will do more, seem to be coming together quite well. The path of least resistance is for a cheaper euro.”
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