The dollar retreated against most of its peers Monday, with warnings of wild volatility ahead as Donald Trump began his presidency promising to put America first and hitting out at global trade deals.
While trading floors are ravaged by uncertainty over the tycoon’s plans, shares in most Asian markets rose following a positive lead from Wall Street, though Japan’s Nikkei tanked as the greenback slipped against the yen.
Trump’s inauguration speech Friday continued his campaign rhetoric, saying “every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families”.
On Sunday he vowed to start renegotiating the North American Free-Trade Agreement during upcoming talks with Mexico and Canada.
“Markets are now waiting for more evidence that Donald Trump will deliver on fiscal stimulus and deregulation,” Shane Oliver, Sydney-based global investment strategist at AMP Capital Investors, told Bloomberg News.
“Shares remain vulnerable to a further correction or consolidation in the next month or so.”
But the dollar — which soared in November and December on expectation Trump’s big-spending, tax-cutting, deregulation plans would fan inflation — continued to struggle in January.
In afternoon trade Monday it bought 113.40 yen, well down from 114.60 yen Friday and more than four percent down from the highs touched late in December. It was also well down against the euro and pound despite ongoing concerns about Britain’s exit from the European Union.
– ‘Volatile times’ –
“I suspect we’re entering extremely volatile times for the dollar,” Stephen Innes, senior trader at OANDA, said in a note.
“There remains a high level of uncertainty about the new administration’s dollar policies, especially following President Trump’s recent remarks on the strong dollar directed at China.”
Trump last week said the greenback was too strong against China’s yuan and claimed this was “killing” the US economy.
The stronger yen dragged down exporters on Tokyo’s Nikkei, which ended 1.3 percent lower. Takata collapsed again, diving nearly 18 percent on fears of a drawn-out bankruptcy restructuring for the airbag maker at the centre of the biggest-ever auto safety recall.
The embattled stock, which has lost more than half its market value in a week, fell by its daily limit, extending a losing streak to a sixth session.
Sydney shed 0.8 percent but Hong Kong rose 0.1 percent while Shanghai closed up 0.4 percent.
Seoul was marginally higher with Samsung surging more than two percent as it looked to put its exploding Galaxy Note 7 crisis behind it by announcing the problem was down to a faulty battery.
Singapore added 0.3 percent. Taipei surged one percent ahead of a week-long Lunar New Year holiday and there were also healthy gains in Manila and Bangkok.
In early European trade London, Paris and Frankfurt each fell 0.7 percent.
– Key figures at 0800 GMT –
Tokyo – Nikkei 225: DOWN 1.3 percent at 18,891.03 (close)
Shanghai – Composite: UP 0.4 percent at 3,136.77 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 22,898.52 (close)
London – FTSE 100: DOWN 0.7 percent at 7,151.35
Euro/dollar: UP at $1.0746 from $1.0699
Pound/dollar: UP at $1.2450 from $1.2368
Dollar/yen: DOWN at 113.40 yen from 114.60 yen
Oil – West Texas Intermediate: DOWN six cents at $53.16 per barrel
Oil – Brent North Sea: DOWN two cents at $55.47
New York – Dow: UP 0.5 percent at 19,827.25 (close)
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