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    European Session – Euro slips to 10-day low as ECB meeting comes into focus

    The euro was one of the worst performing major currencies on Monday, slipping to a 10-day low against the dollar. The single currency has been declining since its reversal from the 1.1500 level last week and it would be difficult to rebound ahead of a European Central Bank meeting on Thursday. Downside momentum is expected to remain since many bet that ECB Chief Mario Draghi would sound dovish and try to talk down the currency. While no move is expected by the central bank at this week’s meeting, there is growing speculation that the current quantitative easing program could be expanded or extended.

    The euro touched as low as 1.1308 versus the dollar, its weakest since October 9. Against sterling it fell to a 3-1/2-week low of 0.7304.

    Meanwhile, Eurozone construction data released today came in weaker-than-expected and helped with weakness in the euro, as it is one of the last data points before the ECB meeting.

    The pound benefited from a weaker dollar and rallied to 1.5495 from a European session open of 1.5442. There were no UK data releases today but investors are eyeing a speech tomorrow by Bank of England Governor Mark Carney. He is due to testify on the Bank of England Bill before the Treasury Select Committee.

    The Australian dollar was the biggest movers among major currencies, strengthening to 0.7306 versus the greenback before easing back down. GDP data from China today was slightly better-than-expected and helped give a boost to the aussie.

    The dollar was flat against the yen and consolidated within a 50-point range around 119.35 yen. The US economic calendar today featured the latest readings on the US housing market. The NAHB Housing Market Index jumped 3 points in October to a level of 64 from a previous 61. (revised from 62).

    Risk for the dollar/yen pair comes in the form of the FOMC and the Bank of Japan meetings next week.

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