The euro has extended losses into a sixth straight day to trade near a nine-year low as investors bet the ECB was getting closer to adopting quantitative easing to ward off deflation. As Sonia Legg reports a slump in German industrial orders and concerns over Greece reinforced bearish views of the single currency.
Five days of falls and the euro starts breaking records. It hasn't been under $1.18 for nine years and almost fell below the $1.17 level it first traded at way back in 1999. A slump in German industrial orders was partly to blame. But it was the prospect of significant stimulus from the European Central Bank after euro zone inflation became deflation that was the real catalyst. That's a worry says CMC Markets' Michael Hewson. (SOUNDBITE) (English) CMC MARKETS, MICHAEL HEWSON, SAYING: "When you are looking at yields here in the euro area - they are already at record lows - given the divisions within the governing council I think it is highly unlikely we are going to get anything significantly substantial to justify the current declines we are currently seeing in the euro and I think the biggest concern is that the markets are getting slightly ahead of themselves." Fears about the general election in Greece aren't helping. The opposition party's lead has narrowed in recent days. But there are still concerns about a stand-off between Berlin and Athens over the austerity imposed on Greece. And the timings aren't helpful either - the ECB meeting takes place three days before the election. (SOUNDBITE) (English) CMC MARKETS, MICHAEL HEWSON, SAYING: "I don't think investors are pricing that in. We may hear details about a sovereign bond buying programme but I think it is going to be very difficult for the ECB to undertake to buy Greek government bonds when they don't know the flavour of the government they are getting on January 25th." Investors still hope to see politicians playing their part in a euro zone revival by introducing reforms. Some fear too many are relying on the ECB to wave a magic wand.