Euro Weak ahead of European Central Bank Meeting

The euro on Friday hovered around seven-month lows on the dollar and was also weak against Asian currencies on speculation that the European Central Bank will unleash fresh stimulus measures next week.

Further action by the ECB to boost the 19-nation eurozone economy was likely to heap pressure on Asian policymakers to loosen their own monetary policy in a bid to push down their units to stay competitive, analysts said.

The euro Friday declined against a string of currencies including the yen, South Korean won and Singapore dollar.

"(Asian) currencies don't look that cheap," Mitul Kotecha, head of Asian foreign-exchange and interest-rate strategy at Barclays in Singapore, told Bloomberg News.

"When you look at real-effective rates, they haven't weakened significantly. That's why there's probably still more room for further depreciation."

Speculation that the ECB will announce further measures at its Thursday meeting have also revived expectations that the single currency may soon hit parity with the dollar for the first time since 2002.

On Friday, the euro weakened to $1.0612 and 130.10 yen from $1.0622 and 130.18 yen in Asian trade Thursday.

The dollar, meanwhile, rose to 122.61 yen on Friday from 122.56 yen in Tokyo the previous day.

The greenback has been boosted as the U.S. Federal Reserve appears set to go in the opposite direction from ECB and Bank of Japan policymakers by raising interest rates as early as next month.

"While moves in the USD hold the key for all risk assets, this will largely be driven by the implied probability of a December rate hike from the Federal Reserve," Chris Weston, chief market strategist at IG Ltd, said in a client note.

The dollar also gained against a string of emerging currencies including Malaysia's ringgit and Indonesia rupiah, as well as the won and Taiwan dollar.