EUR/USD drops to 1.23 Before ECB

The euro slumped to a two-year low as reports showing economic growth in the U.S. contrasted with weak data from Europe, amplifying calls for European Central Bank President Mario Draghi to unveil further easing tomorrow.

The dollar touched a seven-year high against the yen as the Federal Reserve said “employment gains were widespread across districts” after a gauge of U.S. service industries expanded at the second-fastest pace in nine years. The greenback reached the strongest in four years versus the Aussie as Goldman Sachs Group Inc. joined Deutsche Bank AG in predicting an interest-rate cut for Australia. Russia’s ruble bounced from a record low amid speculation the central bank intervened to support the currency.

“Draghi has set up the market to say he’s going to do more,” Peter Gorra, head of foreign-exchange trading in New York at BNP Paribas SA, said by phone. “It’s going to be unusual for him to say, ‘actually, I didn’t mean it.’ I’ll stick with euro as the trade,” he said, selling it versus the dollar.

Bloomberg

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