By Lisa Twaronite
TOKYO (Reuters) - Asian shares held near six-week highs on Thursday as investors bet the European Central Bank will unveil a bond-buying stimulus program later in the day in an attempt to revive the flagging euro zone economy.
The euro treaded water ahead of the ECB decision, while the Canadian dollar took the spotlight after plunging to a nearly six-year low following the Bank of Canada's surprise move to slash its overnight rate to help cushion the economy from recently plunging oil prices.
The loonie skidded almost 2 percent - its biggest one-day drop since November 2011 - to as far as $1.2420 per U.S. dollar <CAD=D4>, and last stood at C$1.2334, down about 0.1 percent on the day.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was nearly flat in early trade, staying around a six-week high hit on Thursday, while Japan's Nikkei stock average <.N225> was flat in early trading
The euro edged up about 0.1 percent to $1.1621 <EUR=>, moving away from an 11-year nadir of $1.14595 plumbed last week as the market trimmed short positions ahead of the ECB meeting.
A source told Reuters the ECB's Executive Board has proposed a quantitative easing (QE) program that would enable the bank to buy 50 billion euros ($58 billion) in bonds a month from March.
"The market has been expecting ECB QE for over a quarter and our flows highlight short positioning is a consensus view. Obviously selling can always return with a strong upside surprise, but we consider flow is an approximation of demand – the data suggests interest is dropping," Richard Cochinos, a strategist at CitiFX Wire, wrote in a client note.
From a flow perspective, Cochinos said that positioning suggests that the euro might be sensitive to a squeeze as leveraged investors take profits on their positions if the ECB simply met or disappointed expectations.
The dollar edged down about 0.1 percent against its Japanese counterpart to 117.85 <JPY=>, giving back much of the ground it gained in the previous session after the Bank of Japan held policy steady. The BOJ maintained its bullish inflation outlook for 2016 even as it cut its 2015 projections following falls in oil prices in recent months.
(Editing by Shri Navaratnam)