* Dollar struggles on cautious Fed, subdued U.S. yields
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Oct 13 (Reuters) - The euro is on track for its biggest weekly rise in a month as investors put political concerns on the back-burner and look ahead to a European Central Bank meeting at which it is expected to outline plans to unwind its huge stimulus programme.
Appetite for the single currency was also supported by a broadly muted dollar, which received a setback this week as minutes from the latest U.S. Federal Reserve meeting showed U.S. policymakers growing wary about the inflation outlook.
“We are constructive on the euro’s outlook as the political clouds have started to lift in the near term and markets are looking at the underlying economic strength,” said Valentin Marinov, head of G10 FX research at Credit Agricole in London. He is advising clients to remain long euros vs the dollar, yen and the franc.
European Central Bank policymakers broadly agree over extending asset purchases at a lower volume at their October policy meeting with views converging on a nine-month extension, five people with direct knowledge of the discussion said.
The euro touched its highest in more than two weeks at $1.1880 on Thursday and was trading a shade below that level at $1.1827 on Friday. It was on track for its biggest weekly rise since Sept. 10.
Industry data from Italy beat forecasts, after Germany reported robust trade data earlier this week, indicating a broad-based economic recovery in the euro zone despite the single’s currency double-digit gains this year.
The dollar was set for its biggest weekly drop in more than a month as U.S. Treasury yields stayed near recent lows before U.S. inflation data.
The dollar index, which tracks the currency against a basket of six major peers, was flat at 93.07.
It rose to a 10-week peak of 94.267 last Friday after robust U.S. wages data hardened expectations for a December Federal Reserve rate hike, but has slipped through the week along with a steady decline in Treasury yields.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Reporting by Saikat Chatterjee; Additional reporting by Lisa Twaronite in TOKYO; Editing by Catherine Evans)