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    Dollar drops to two-week lows against the yen

    The greenback fell to new two-week lows against the Japanese yen, a day after the Japanese PM delayed a scheduled sales tax hike, triggering speculation that Japan is shifting from a monetary easing programme towards fiscal stimulus.
     
     The USD/JPY pair fell 0.48% to 109.01, the weakest level since the 18th of May 2016. The yen remained supported after Shinzo Abe said on Tuesday that he was planning to delay a sales tax raise amid escalating weakness in the economy. He also announced his plans to employ a fiscal stimulus package later in 2016.
     
    AUD/USD also inched down 0.33% to 0.7236 after the release of mixed data from Australia.  A report from the Australian Bureau of Statistics showed that retail sales increased by 0.2% in April, missing expectations for a 0.3% rise, after an increase of 0.45 in March.
     
    Another report from Australia revealed that the country’s trade deficit narrowed to A$1.58 billion in April from a downwardly revised print of A$1.97 billion in the month before.  Economists had expected the trade deficit to widen to A$2.00 billion.
     
    The New Zealand dollar was little changed at 0.6812 against the dollar, ahead of the ADP nonfarm payrolls report.
     
    The U.S. dollar index which tracks the greenback's performance against a group of six other counterparts fell 0.26% to 95.17, the lowest level since the 27th of May. The greenback remained vulnerable after a string of mixed U.S. economic reports added to concerns over whether the Fed will hike rates in June.
     
    The Institute of Supply Management reported on Wednesday that its manufacturing index increased for a second month in May. The data came after a similar report by the research group Markit showed that U.S. factory activity deteriorated in May, reaching the lowest level since September 2009.
     
    Another report revealed that U.S. consumer spending registered the highest monthly decline in April since January 2011.

    Investors were shifting their attention to the release of the ADP report on nonfarm payrolls and initial jobless claims due later in the day for further clues on the status of the labour market and possible indications of the timing of the next U.S. rate hike.
     

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