The euro dropped against the U.S. dollar in Asia on Monday as some skepticism about the European Central Bank's policy actions pulled the common currency further away from recent highs. The euro EURUSD -0.23% was buying $1.2284 by mid-afternoon in Hong Kong, back to the level seen in New York late on Thursday. The currency had jumped as high as $1.2389 on Friday, before edging down to $1.2320 late in North America. The gains on Friday followed a report in The Wall Street Journal that ECB President Mario Draghi wants to discuss purchases of sovereign bonds by the central bank, in tandem with the euro-zone rescue fund. Some other reports said Draghi was considering another long-term refinancing operation, or LTRO, to make more cheap funds available to financial institutions. But while most Asian equity markets rallied Monday, the euro depreciated against the dollar, as some analysts voiced skepticism. Read Asia Markets. “Despite market expectations of ECB intervention, we expect it to keep its policy stance unchanged, denting the current risk rally. There is a reluctance to bring in LTRO again, while bond purchases will require a giant leap forward politically," said Sue Trinh, senior currency strategist at RBC Capital Markets. Analysts at Credit Agricole said expectations were running high that global central banks would take more policy actions at present, likely leaving markets vulnerable in case those hopes weren't met. “Given the rally in risk assets at the end of last week, a lack of action by policy makers this week suggests significant scope for disappointment," Credit Agrocole strategist Mitul Kotecha wrote in a note to clients. The WSJ dollar index XX:BUXX +0.17% , a recently-launched gauge of the dollar's performance against other heavily traded major currencies, gained to 71.80 from 71.73. In addition to the ECB's policy decision later this week on Thursday, markets were also looking ahead to this week's crucial U.S. nonfarm payrolls data, due on Friday. Among other major currencies, the dollar USDJPY -0.34% was fetching ¥78.372 from ¥78.513, after data released earlier in the day showed an unexpected decline in Japan's monthly industrial production. Read full story on Japan's industrial production. The British pound GBPUSD -0.22% was fetching $1.5702 from $1.5728, while the Australian dollar AUDUSD +0.10% was trading at $1.0468 from $1.0474. MarketWatch
