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SYDNEY (Reuters) - The yen struggled at two-week lows against the euro and dollar on Thursday, with wary investors taking a pre-emptive move in case the Bank of Japan surprises this week by easing policy.
The market also gave the Australian dollar a wide berth, but left the euro pretty much alone against the greenback as investors waited for the outcome of the European Central Bank meeting due at 1145 GMT.
The dollar bought 78.51 yen, having risen as high as 78.585, a level not seen since September 19. The euro fetched 101.37, not far off a peak of 101.46 set overnight.
The BOJ, which only last month boosted its asset-buying and loan programme, has been under intense political pressure to offer more stimulus to spur growth and weaken the yen.
Still, analysts generally expect the BOJ to stand pat at the October 4-5 meeting to gauge the effects of its latest easing, given there is another review just around the corner on October 30.
Against the greenback, the euro was at $1.2918, stuck in a $1.2800/3000 range. Markets are still waiting for Spain to seek a bailout and trigger the ECB's recently announced bond-buying programme.
Because of that, analysts believe the ECB will hold off another cut in interest rates later on Thursday.
"With very little expected for this ECB meeting, the real market mover for the euro may be the Spanish bond auctions," said Mary Nicola, a strategist at BNP Paribas.
"Today's Spanish bond auctions will provide a litmus test for the market's perception on Spain."
Madrid is looking to raise up to 4 billion euros ($5.2 billion) by selling three bonds maturing 2014, 2015 and 2017.
The bearish backdrop for the global economy prompted Australia's central bank to cut interest rates this week and leave the door ajar for more.
This had given investors the greenlight to sell the Aussie dollar, which fell further overnight to a fresh one-month low of $1.0196.
The Aussie has dropped some 4 percent from its September 14 peak of $1.0625. It was last at $1.0228, on track to retest last month's trough of $1.0165.
The Aussie's immediate fortunes lie in the hands of retail sales data due at 0130 GMT. Forecasts centre on a 0.4 percent bounce, following July's 0.8 percent fall.
Traders say a much better-than-expected result could see investors cut bearish positions in the Aussie. Conversely, another sharp fall in retail sales could hasten the currency's decline to the September target low.
Editing by Wayne Cole