Divergent monetary policy from the European Central Bank and the US Federal Reserve sends euro to seven-month low against the dollar
The euro fell 0.6 per cent against the dollar to $1.0682, sliding to a fresh seven-month low against a backdrop of increasingly divergent monetary policy from the European Central Bank (ECB) and US Federal Reserve.
Yesterday four ECB government council members hinted a consensus is forming at the Bank to take one of its benchmark interest rates deeper into negative territory in December.
But today one governing member, Erkki Liikanen, said Frankfurt is yet to decide whether it will cut interest rates.
Read more: Standard & Poor's thinks the European Central Bank will extend its quantitative easing programme
The drop comes amid much speculation that the Fed could move to raise interest rates for the first time since 2006 in its last meeting of this year.
Eric Rosengren, the dovish president of the Boston Fed, yesterday pointed to an interest rate rise at the end of this year.
"The US is out in front on its own, and everyone else is heading the other way. In that case, positioning becomes very key, if the interest-rate story is going to be centre," Rosengren said.