Euro weaker in Asia ahead of ECB meeting

TOKYO: The euro weakened in Asia early Wednesday, with markets cautious ahead of a European Central Bank meeting dealers expect will see more crisis-fighting measures for the debt-hit continent.

The single currency bought $1.2530 and 98.36 yen in Tokyo morning trade, from $1.2564 and 98.51 yen in New York late Tuesday.

The dollar inched higher, buying 78.49 yen against 78.40 yen in New York, even as poor manufacturing data hinted at further slowing in the US economy.

The euro backed off its Monday highs that were sparked by the European central bank's chief Mario Draghi signalling it may restart the purchase of bonds issued by troubled eurozone nations such as Italy and Spain.

The programme, designed to lower fiscally-challenged nations' borrowing costs, has come under fire from critics including Germany who said the measures would let troubled eurozone members avoid painful but necessary austerity cuts.

It remained unclear what measures, if any, Draghi would announce following Thursday's meeting.

"If the announcement is delayed, it would pose a risk of worsening the market sentiment greatly," Hiromichi Shirakawa, analyst at Credit Suisse in Tokyo, said in a note.

Another possibility is an interest rate cut by the bank to a record low of 0.50 percent, Shirakawa said.

"We need to pay attention to the possibility that the euro would drop" if the ECB announced a rate cut, he told Dow Jones Newswires.