Asia extended a global stocks rally on Friday after the European Central Bank (ECB) signalled its readiness to inject more stimulus, helping the dollar scale a fresh two-month peak against the euro.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6 per cent, on track for a modest weekly loss of about 0.1 per cent.

Japan's Nikkei stock index was up 2.3 per cent, poised to gain more than 3 per cent for the week.

After the ECB held policy steady at its meeting on Thursday as widely expected, central bank chief Mario Draghi told a news conference that ECB policymakers were "open to the full menu of monetary policy" to stoke the euro zone economy as needed.

"This raises further questions about the policy outlook for the Federal Reserve and Bank of Japan, both of which have meetings next week," said Sean Callow, senior strategist at Westpac in Sydney, who called it "surprising" that markets were still pricing in a 30 per cent chance that the Fed will hike by December.

"How likely is it that the Fed will be optimistic enough about the emerging market outlook that worried them in September to raise rates in December, less than 2 weeks after the ECB seems set to expand QE, blaming emerging market weakness?" Callow wrote in a note to clients on Friday.

The Fed will meet on Tuesday and Wednesday next week, after its policymakers opted to hold interest rates steady last month, amid concerns that a slowing global economy, particularly in China, could pose risks to the U.S. economic outlook.

The euro continued to slip after marking its largest one-day percentage drop against the dollar in nine months on Thursday.

The common currency was down 0.3 per cent at $1.1076 after falling to a two-month nadir of $1.1072.

The euro's plunge helped lift the dollar index to a one-month high. It was last at 96.543, up about 0.2 per cent on the day and more than 2 per cent for the week, after it rose as high as 96.579 in early Asian trade.

Against the yen, the dollar added about 0.2 per cent to 120.92, after touching a one-month high of 120.99 yen earlier.

Crude oil prices edged up, taking heart from the improved risk sentiment but still pressured by concern about high U.S. crude inventories and the stronger dollar.

Brent added 0.4 per cent to $48.28 a barrel, but was on track for a weekly loss of more than 4 per cent. U.S. crude added about 0.1 per cent to $45.44 but was down nearly 4 per cent for the week.

The stronger greenback also weighed on spot gold prices. Gold was slightly lower at $1,165.36 an ounce after touching a nine-day low overnight, and was down nearly 1 per cent for the week.

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