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Euro falls below 1999 rate as QE door left open

The euro fell below its 1999 launch rate against the dollar for the first time in over nine years today after an adviser to Europe’s highest court said an ECB bond-buying programme was legal under certain conditions. 

The euro fell against the dollar following the adviser’s opinion, hitting a nine-year low of $ 1.1728.

This was down 0.3% on the day and below the psychologically important $ 1.1747 level at which the single currency first traded on January 4 1999. 

The advocate general of the European Court of Justice, Pedro Cruz Villalon, advised judges to approve the European Central Bank’s so-called OMT programme – on condition the ECB was not directly involved in an assistance programme for countries that benefit. 

Though a final ruling will not be made for several months, traders said an adverse or complicated recommendation would have given the ECB less room for manoeuvre at its next policy meeting on January 22.

Many expect the ECB to launch a full-scale quantitative easing programme after that meeting. 

Meanwhile, the World Bank yesterday lowered its global growth forecast for both 2015 and 2016 due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. 

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