The dollar was firm and Asian stock markets were cautiously positive on Monday, with investors awaiting an expected avalanche of policy announcements in the early hours of Donald Trump’s second presidency and hoping for a rate hike in Japan at the end of the week.
Mr Trump is sworn in at noon Eastern Time (5 p.m. GMT) and promised a “brand new day of American strength” at a rally on Sunday.
He fueled expectations that he would immediately issue a series of executive orders and, in a reminder of his unpredictability, launched a digital token on Friday, which skyrocketed to trade above $70 at one point, for a total market value of over $15 billion.
With Monday being a public holiday in the United States, the first reactions to Mr. Trump’s inauguration in traditional financial markets could be felt in foreign exchange markets, where traders are focusing on Mr. Trump’s pricing policies , then on Asian markets on Tuesday.
U.S. stock futures were a little weaker in Asian morning trading Monday, while the dollar, which has rallied since September on strong U.S. data and momentum from Mr. Trump, who ultimately succeeded, remained stable.
Japan’s Nikkei rose 1%. [.T]
Last week, the S&P 500 posted its biggest weekly percentage gain since the start of November and the Nasdaq its biggest gain since the start of December thanks to benign inflation data.
The dollar is up almost 14% against the euro since September and, at $1.0273, it is not far from last week’s two-year high. But prices are so high that some analysts think a more gradual start to U.S. tariff increases could attract some sellers.
“A forceful start to Trump’s new term could shake nerves and give more support to the dollar,” said Peter Dragicevich, currency strategist at Corpay.
“On the other hand, based on what already appears to be embedded, we believe that a more measured approach could allay fears and see the dollar lose ground, as was the case after Trump took office in 2017. “
Trump has threatened to impose tariffs of up to 10% on global imports and 60% on Chinese goods, as well as a 25% import surcharge on Canadian and Mexican goods, duties that , according to trade experts, would disrupt trade flows, increase costs and invite retaliation.
The Canadian dollar reached its lowest level in five years on Monday, namely 1.4486 Canadian dollars per dollar. The Mexican peso hit its lowest level in two and a half years, at 20.94 per dollar, on Friday. [FRX/]
-Bitcoin fell early in the day in Asia but remained above $100,000. 10-year Treasury yields closed Friday at 4.61%, up nearly 100 basis points in four months. [US/]
FOCUS CHINE
China is the center of attention as the target of the harshest potential trade measures. Investors recently welcomed better-than-expected Chinese growth data and a Friday phone call between Trump and Chinese President Xi Jinping that left both sides optimistic.
“Actually, everyone is waiting for the start of trade talks and Xi Jinping’s attitude towards Trump,” Ken Peng, head of Asia investment strategy at Citi Wealth, said during a briefing on the prospects in Singapore.
“This relationship between the two gentlemen has become very important as a leading policy indicator.”
Chinese stock markets rose last week and futures pointed to modest gains for Hong Kong stocks at the open.
The yuan is seen as likely to adjust slowly to any trade policy changes and was slightly firmer at 7.3355 per dollar in offshore trading.
The Australian dollar, sensitive to trade flows and the Chinese economy, has retreated from five-year lows and, according to Commonwealth Bank strategist Joe Capurso, could test resistance at $0.6322 if the Trump’s policy changes do not live up to market expectations. Its last price was $0.62.
The Japanese yen rallied last week as remarks from Bank of Japan policymakers were interpreted as hints that a rate cut on Friday was likely.
It remained stable at 156.17 per dollar and rates markets priced the chance of a 25 basis point rate hike at around 80%.
In commodities, gold hovered at $2,694 an ounce and Brent oil futures rose as high as $81.21 a barrel.
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