* Euro nurses losses after biggest weekly drop in over a
* ECB meeting on Thursday key for common currency
* Aussie dollar eyes data dump, ahead of RBA meeting Tuesday
By Ian Chua
SYDNEY, Nov 4 The euro languished at two-week
lows early in Asia on Monday, having suffered its biggest drop
in over a year last week as expectations grew the European
Central Bank will be forced to cut interest rates to shore up
After data last week showed a plunge in euro area inflation,
a growing number of analysts including UBS and RBS reckon a rate
cut could come as soon as Thursday's policy meeting.
The euro last traded at $1.3490, not far off Friday's
trough of $1.3478. It skidded 2.3 percent last week to test
chart support around $1.3460/80, a level that has held since
"Although market expectations for ECB action have grown due
to the weak inflation print, we think a December move is much
more likely," analysts at Barclays Capital wrote in a note,
adding an unchanged rate setting on Thursday could lead to a
knee-jerk bounce in the euro.
"However, we expect dovish rhetoric at the press conference
from ECB President Mario Draghi to keep a December move in play.
We would therefore recommend using any EUR rally as a better
entry level to re-engage in EUR/USD downside."
Against the yen, the common currency was at 133.25
, having fallen as far as 132.60 last week, its lowest
in three weeks.
Pressure on the euro helped keep the dollar at six-week
highs against a basket of major currencies. The dollar index
was steady at 80.703, close to Friday's peak of
The dollar was little changed against the yen at 98.68
, within easy reach of a three-week high of 98.86 set on
Commodity currencies failed to gain traction against the
buoyant dollar even after upbeat data out of China over the
Data on Sunday showed activity in China's services sector
expanded at the fastest pace in 13 months in October, offering
further indications that the world's No. 2 economy has
The Australian dollar traded at $0.9448, struggling
to pull away from Friday's three-week trough of $0.9421. The
Aussie's immediate fortunes hinge on a string of economic data
due at 0030 GMT, including retail sales.
The batch of data comes a day before the Reserve Bank of
Australia holds its policy meeting. All 23 analysts polled by
Reuters on Friday expect the RBA to keep its cash rate unchanged
at a record low 2.5 percent.
Trading is likely to be subdued in Asia on Monday with
Japanese financial markets shut for a public holiday.