Dollar Hits Fresh Highs Against Euro and Yuan (ON RATE HIKE BELIEFS; DOVISHNESS ABROAD)

The euro fell to a seven-month low in Asian trading hours at $1.0930, down 0.3% from its Thursday close in New York.

The euro's slide came after ECB chief Mario Draghi on Thursday suggested the central bank may extend its program of bond purchases beyond its scheduled expiration in March. Financial markets were rattled earlier this month by a media report suggesting that the ECB might start to wind down, or taper, those purchases, which are designed to pump more money into the financial system and stoke higher lending. But Mr. Draghi brushed off that report on Thursday as "uninformed."

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The yuan's recent slide--it is down 1.3% onshore in October alone--might in the past have drawn criticism internationally from countries concerned that Beijing is deliberately devaluing its currency to gain a competitive advantage in trade. The yuan is now close to the 6.83 level it was held at against the dollar from July 2008 to June 2010, following the global financial crisis.

... this time around there is widespread acceptance that Beijing is simply allowing the yuan to fall in line with dollar strength and its stated policy of setting the its level with reference to a basket of major international currencies. The U.S. Treasury last week toned down its criticism of China's currency practices in a twice-yearly report.