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The yen hit a fresh 20-year low versus the dollar on Wednesday and slipped to a seven-year trough against the euro as traders awaited a European Central Bank meeting likely to leave Japan alone among peers in sticking to ultra easy monetary policy.

The ECB meets on Thursday and markets are expecting it to at least lay the groundwork for rapid rate rises, if not begin them with a small hike.

The yen has accordingly lost more than 4.5% from 127.09 per dollar to touch 133.22 in eight sessions, dropping hard on crosses as investors see soaring consumer prices forcing central banks around the world to crimp demand with rapid hikes.It has fallen more than 6% in 10 sessions to a seven-year low of 96.12 per Australian dollar, accelerating the slide after a surprisingly big rate hike in Australia on Tuesday.

“Yield differentials continue to favour the US dollar, with USD/JPY breaking above 132,” said Matt Simpson, a senior market analyst at brokerage City Index. “It is quite apparent that the BOJ favour defending yield curve control over a weaker currency,” he said. “135 is the next major line in the sand” the February 2002 high.”

 

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