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The dollar touched a two-week low against the yen on Thursday, weighed down by ongoing uncertainty over whether the US Federal Reserve will raise interest rates soon.
The dollar fell 0.4 per cent to 109.07 yen. The greenback touched a low of 108.825 at one point, down 2.4 per cent from a one-month high of 111.455 yen that had been set on Monday.
EU referendum
Worries about whether Britain will vote to stay in the European Union or not later this month helped lend support to the safe haven yen, while the dollar was hampered by uncertainty over whether the US Federal Reserve will raise interest rates later this month.
“While the US ISM numbers yesterday were pretty good, there’s still uncertainty over whether there will be an interest rate hike in June,” said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
Data on Wednesday showed that US manufacturing grew for a third straight month in May, but factories appeared to be taking in fewer deliveries from their suppliers, which could hamper production in the months ahead.
BOJ’s decision
Analysts said the yen drew added strength from comments by Bank of Japan board member Takehiro Sato, who said on Thursday he was opposed to deepening negative interest rates.
Sato was among those in the nine-member board who voted against the BOJ’s decision in January to add negative interest rates to its massive asset-buying programme. The BOJ has kept monetary policy steady since then.
Japan’s government will set out a new growth strategy on Thursday that has already disappointed many economists for lacking the bold structural reforms.
Prime Minister Shinzo Abe had announced on Wednesday that he was delaying a sales tax hike by two and a half years due to the fragility of the economy, but the move has raised concerns over how the government will cover the shortfall in revenue.
The dollar will await the US May ADP private employment report due later in the day for potential relief, with the report often seen providing clues to the all-important non-farm payrolls data scheduled for release on Friday.
ECB policy meet
The market will keep an eye on the European Central Bank’s policy meeting later in the session, although few expect the gathering to result in fireworks as the central bank is widely anticipated to stand pat on monetary policy.
The euro rose 0.1 per cent to $1.1199, edging away from a 2-1/2 month low of $1.1097 set earlier this week.
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