The dollar fell to fresh
two-week lows against the yen on Thursday, a day after Japan delayed a planned
sales tax increase, fuelling speculation that the country is shifting away from
monetary easing towards fiscal stimulus.
USD/JPY was down 0.48% to 109.01, the weakest level since May 18.
The
yen continued to gain ground after Japanese Prime Minister Shinzo Abe said
Tuesday he was planning to delay a scheduled sales tax hike amid ongoing
weakness in the economy. He also announced plans to implement a fiscal stimulus package later this year.
The
announcement raised speculation over a shift away from monetary easing by the
Bank of Japan as a way to spur growth.
The U.S. dollar index, which measures the
greenback’s strength against a trade-weighted basket of six major currencies,
was down 0.26% at 95.17.
The
dollar remained on the back foot after mixed U.S. economic reports added to
doubts over whether the Federal Reserve will raise interest rates in June.
The
Institute of Supply Management said Wednesday that its manufacturing index expanded for a second
month in May.
Investors
were turning their attention to Friday’s U.S. nonfarm payrolls report for May
for fresh indications on the strength of the labor market.
The
U.S. was to release data on ADP non-farm payrolls and initial jobless claims
later Thursday.
U.S.
central bank chief Janet Yellen said last week it could be appropriate raise
rates in the coming months if the economy and the labor market continue to pick
up as expected, fueling expectations for a near-term rate hike.
The
Fed hiked interest rates in December for the first time in almost a decade.
Higher
rates are positive for the dollar because they make the U.S. currency more
attractive to yield-seeking investors.
The ECB was not widely
expected to make any changes to monetary policy, but some analysts were
expecting the bank to raise its forecasts
for inflation and growth.
Technical
Support at 94.50 and resistance at 96.00
Closes above 96.00 will take it to 96.50--96.80 else could test its support level 94.50.
Further upside rally can be seen if closes above 96.00.
More and more downside panic will be seen below 94.50.
Trade with levels only.
More will update soon!!
