By Alun John

HONG KONG (Reuters – While the yen was at a low 20-year high against the dollar, major currency pairs were trading cautiously ahead to a much-anticipated European Central Bank meeting, in which the central bank should give insight into its monetary tightening plans.

It is almost certain that the ECB will end its asset-purchase programme, which has been running since the beginning of the month. They also promise a July rate increase, although the pace and size of their tightening remain uncertain.

Speculations are growing about the possibility that eurozone inflation is so severe as to force the ECB to launch a hike campaign, with a substantial 50 basis-point rate rise.

On Thursday, the euro was unchanged at $1.07130 after moving very little during this week.

Carol Kong of Commonwealth Bank of Australia, currency strategist, said that if Christine Lagarde (ECB President) “leans towards a more hawkish rate move in future, it’s going to give a boost euro-dollar.”

“I do not believe a rate raise today is likely as the ECB talked a lot regarding sequencing and stated that it will end asset purchases before increasing interest rates. But, given the fact that inflation is at a record-high and the economic justification for a rate boost is present, I wouldn’t completely exclude it,” she said.

The deadline for policy announcements is 11.45 GMT. There will also be a conference at 12.30 GMT.

In other areas, the yen took a further tumble and dropped to a new 20-year low at 134.56 yen for every dollar early trade.

It’s close to the 135.20 level on Jan. 31, 2002. If it breaks that mark, then this would be its lowest value since Oct 1998.

The euro is currently trading at 143.72 euros, a level that’s around seven and a half years below its peak.

Rising interest rates all over the globe have weighed on the yen, causing the Bank of Japan to keep its policy stimulatory. Japan’s current account surplus has also been decreasing.

Sterling settled at $1.2534 and the Australian dollar, which is more risk-friendly, was slightly lower at $0.7178. This was in keeping with the low share market. [MKTS/GLOB]

It was slightly higher at 102.59.

Bitcoin continues to trade around $30,000 in cryptocurrencies as it did for several weeks. On Thursday, it traded a little firmer at $30,000.