TOKYO: The euro edged lower in Asia Thursday ahead of a European Central Bank meeting as markets wait to see if policymakers cut rates on the back of worrying deflation data.
The European single currency bought $1.3513 and 133.26 yen in midday Tokyo trade, down from $1.3517 and 133.40 yen on Wednesday in New York, where it was given a boost from upbeat German factory data.
The dollar bought 98.56 yen, against 98.69 yen in New York.
Analysts expect the ECB to hold rates at 0.50 percent, but data showing eurozone inflation at a four-year low in October has raised the spectre of deflation and fuelled speculation its head Mario Draghi will leave the door open to a future cut.
"Any such hints from Draghi would see the euro weaken further," National Australia Bank said.
And Credit Agricole said: "We do not expect the ECB to deliver a rate cut today, but Draghi could hint more explicitly at a December move while providing more details about the ECB's 'liquidity plans'.
"The assessment of inflation risks holds the key."
It added that "there is an expectation that the ECB will open the door to a December ease in the wake of very soft inflation data".
Currency traders will also be keeping a close eye on third-quarter US gross domestic product figures later in the day and non-farm payrolls data Friday.
"The dollar is ripe for a near-term correction, as markets square positions ahead of Friday's payrolls," Credit Agricole said.
The figures will give traders a handle on the Federal Reserve's plan for its stimulus programme, with the central bank saying any pullback hinges on a firm recovery in the world's biggest economy.
The general consensus is that a strong set of numbers will push the bank into winding down the scheme sooner rather than later.
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