The euro is still close to a nine-year low

NEW YORK (MarketWatch) — The euro slumped to a near nine-year low against the dollar on Monday after a report that the European Central Bank is moving closer to announcing a full-scale quantitative-easing program.

The shared currency EURUSD, -0.04%  traded as low as $ 1.1785, but eventually recovered to $ 1.1837, where it traded Friday afternoon. Last Thursday, the euro dropped to a low of $ 1.175, its lowest since December 2005.

Overall, the euro has lost 5.2% over the past three months, as a sluggish recovery and concerns about deflation have raised expectations that the ECB will begin purchasing sovereign bonds, beginning what economists call “full-blown” quantitative easing.

CNBC reported on Monday that the central bank is planning to base its bond-buying program on how much a national bank has paid to the ECB every year. This would then determine how much the ECB would buy of that country’s government bonds, CNBC said, citing a source close to the central bank.

The report comes ahead of the ECB’s Jan. 22 meeting. Economists increasingly expect the bank to announce a full-blown QE program after the latest consumer-price data showed the eurozone is battling deflation.

In other currencies, the ICE dollar index DXY, +0.36% a measure of the greenback’s strength against a trade-weighted basket of six rival currencies, was flat at 91.9630, compared with 91.9450 on Friday, when the gauge fell by 0.46%.

Friday’s losses accumulated after the U.S. jobs report for December showed hourly wage growth contracted last month, causing investors to delay their expectations for when the Federal Reserve will begin raising its benchmark interest rate.

After rising earlier in the session, the dollar fell against the yen to ¥118.2840, USDJPY, +0.02% compared to ¥118.50 late Friday.

The pound GBPUSD, -0.02%  fell to $ 1.5112 from $ 1.5159.

Dollar rises against oil-sensitive currencies

On Monday. the U.S. dollar held on to its gains against the Canadian dollar, also known as the loonie, trading at a multi-year high of USDCAD, -0.01% 1.1966 loonies to the dollar, its highest level since against the loonie since May 2009. Falling oil and a pessimistic quarterly business outlook survey released by the Bank of Canada weighed on the currency. It traded below $ 1.19 loonies Friday afternoon.

According to the survey, falling oil prices have “significantly dampened” outlook for businesses tied to the energy sector, according to a statement from the Bank of Canada.

The price of West Texas Intermediate crude futures for Feb. delivery fell to $ 46 CLG5, -5.48% its lowest level in almost six years, weighing on the currencies of major oil exporters.

Oil sank after analysts at Goldman Sachs cut their three-month crude-oil price forecast. They now expect the price of London-traded Brent crude to hit $ 42 a barrel — down from $ 80 a barrel — while Nymex-traded West Texas Intermediate crude is expected to hit $ 41 a barrel, down from $ 70 a barrel.

Also read: Oil’s slump could upend $ 2 trillion in investments, Goldman Sachs says

The Russian RUBUSD, -0.09%  ruble and Norwegian krone USDNOK, -0.04%  tumbled alongside the loonie, with the dollar fetching 63 rubles, its highest rate since Wednesday. It traded at 61.80 rubles Friday afternoon.

The dollar traded at 7.72 Norwegian krone, hitting its highest level in three days, up from 7.66 krone to the dollar Friday afternoon. Norway is the largest oil producer in Europe.