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By Bloomberg

The euro headed for a sixth weekly decline against the dollar before an election in Greece this weekend that may shift power from Prime Minister Antonis Samaras to his anti-austerity opponent.

Australia’s currency held a four-day drop after the European Central Bank’s decision to expand its bond-buying program and an interest-rate cut by the Bank of Canada spurred speculation the Reserve Bank of Australia will lower borrowing costs. A gauge of the U.S. dollar traded near its highest since 2004 on prospects America will outperform Europe and Japan, allowing the Federal Reserve to become the first central bank among the major economies to raise interest rates this year.

“The Greek election provides another reason to sell euro in case the ECB decision was not enough,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “A period of consolidation in the mid-$1.13 is reasonable today, but there is no reason to believe a low is in place.”

The euro traded little changed at $1.1365 at 12:35 p.m. in Tokyo after touching $1.1316 yesterday, the weakest since September 2003. It was set for a 1.8 percent weekly loss, sliding 8.8 percent since Dec. 12. The currency was at 134.58 yen from 134.67. The dollar bought 118.42 yen from 118.49.

Greek voters go to the polls on Jan. 25 in a general election that will decide whether Europe’s most-indebted country sticks to an austerity program that ensures its financial lifeline from creditors such as Germany. Alexis Tsipras, who leads the opposition Syriza group, has vowed to abandon the budget constraints that underpin the financial lifeline while keeping Greece in the currency union.

Global Easing

The euro slid against all but one of its 16 major peers after ECB President Mario Draghi told reporters in Frankfurt yesterday the central bank will buy 60 billion euros ($68 billion) a month of public and private debt until September 2016. Canada’s monetary authority cut its rate a quarter of a percentage point on Wednesday. The Fed sets policy on Jan. 28.

“The euro has more downside as the monetary policy divergence will likely become clear with the Fed meeting next week,” said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. in New York. “The ECB’s decision implies quantitative easing will last for a considerably long time and is spurring euro selling in reaction.”

Australia’s dollar fell below 80 U.S. cents for the first time since 2009. Traders on Thursday saw a 40 percent chance the RBA will cut rates at this year’s first policy meeting on Feb. 3, up from 25 percent odds on Jan. 16, according to overnight interest rate swaps.

Below 80

The Aussie was little changed at 80.34 cents, after dropping to as low as 79.95, set for a 2.3 percent weekly slide that would be the steepest since the period ended Sept. 12. New Zealand’s dollar climbed 0.2 percent to 75.21 cents, halting a five-day drop that pushed it toward levels deemed excessive by the relative strength index.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was little changed at 1,154.88 after advancing for a fifth consecutive day in New York. It climbed 0.9 percent yesterday to close at 1,156.11, the highest level in data back to 2004.

Demand for the dollar grew as the expansion of the ECB’s bond-buying program pared yields on German bunds relative to U.S. Treasuries. Five-year government bonds yield 1.35 percent in the U.S., compared with 0.017 percent in Germany. Their spread has widened about 14 basis points since Jan. 15.

“The prospect of the Fed statement next week -- which reiterates that the economy is recovering well and most likely they need to raise rates this year -- definitely underpins the dollar,” Westpac’s Callow said.

The dollar is the biggest gainer in the past week among 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. It added 1.9 percent, the yen rose 1.1 percent and the euro was little changed.