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Written by Tom Westbrook
SINGAPORE (Reuters) – The dollar was firm and Asian stock markets were positive on Monday as investors awaited an expected flurry of policy announcements in the first hours of Donald Trump’s second presidency and they are looking at a rate hike in Japan by the end of the week. .
Trump takes the oath of office at noon Eastern Time (1700 GMT), and promised a “new day of American power” at a rally on Sunday.
He has strong expectations that he will issue a number of management orders immediately, and, as a reminder of the unpredictability, he launched a digital token on Friday, which went up for sale above $ 70 at the same time for a total market north of $ 15 billion.
Monday is a holiday in the US, so the first reactions to his inauguration in traditional financial markets are likely to be felt in foreign exchanges, where traders are focused on Trump’s tariff policies, then then in Asian trade on Tuesday.
US equity futures were mostly weak in Asian morning on Monday as the dollar, which has been performing since September on strong US data and as Trump’s successful political campaign gained momentum, and stuck.
1% higher. ()
Last week saw the biggest weekly gain since early November and the Nasdaq’s biggest since early December with some negative inflation data.
The dollar is up about 14% against the euro since September and at $1.0273 is not far from last week’s two-year high. But the price is so high that some analysts feel that a gradual start to US rate hikes could attract some traders.
“A strong start to Trump’s new term could fray nerves and give the dollar more support,” said Corpay currency strategist Peter Dragicevich.
“On the other hand, based on what already looks cooked, we think that a more measured approach can reduce the fear and see the dollar lose ground, as it happened after Trump take charge in 2017.”
Trump has threatened tariffs of up to 10% on global goods and 60% on Chinese goods, as well as additional tariffs of 25% on Canadian and Mexican products, actions that trade experts say will increase the flow of trade, raising costs and retaliating.
The Canadian dollar fell to a five-year low of C$1.4486 per dollar on Monday. The Mexican peso hit a 2-1/2-year low of 20.94 per dollar on Friday. (FRX/)
it dipped at the start of the Asian day but stayed above $100,000. Benchmark 10-year Treasury yields closed Friday at 4.61%, up nearly 100 basis points in four months. (US/)
CHINA CLAIMS
China is in focus as a target for the heaviest possible tariffs on business. Investors recently cheered China’s better-than-expected growth data and Friday’s phone call between Trump and Chinese President Xi Jinping left both happy.
“Basically everyone is waiting for these trade talks to start and see what kind of attitude Xi Jinping takes on Trump,” Ken Peng, head of Asia investment strategy at Citi Wealth said. told Singaporean reporters in an interview.
“The relationship between the two gentlemen has become very important as a key indicator of policy.”
China’s equity markets rallied last week and futures pointed to lower gains for Hong Kong shares on the open.
The yuan appears to be able to adjust gradually to any changes in trade policy and was firmer than 7.3355 per dollar in offshore trading.
The Australian dollar, sensitive to trade flows and the Chinese economy, has broken five-year lows and, according to Commonwealth Bank strategist Joe Capurso, could test resistance at $0.6322 if Trump’s policy becomes less than market expectations. it ended at $0.62.
The Japanese yen rallied last week as comments from Bank of Japan policymakers were seen as signs of a possible rate cut on Friday.
It last settled at 156.17 per dollar and the bond market is pricing in an 80% chance of a 25% increase.
In commodities, gold was $2,694 an ounce and futures were as high as $81.21 a barrel.
