Dollar slips ahead of Trump return to White House By Reuters

Written by Ankur Banerjee

SINGAPORE (Reuters) – The dollar was safe at the start of a key week on Monday as Donald Trump returned to the White House, with his inauguration speech later in the day a key focus for investors hoping to explain his quick policies.

The Japanese yen strengthened in Asian hours, clinging to a one-month high last week, as traders bet the Bank of Japan will raise its interest rate this week. However, business is likely to be limited as US markets are closed.

Investors are also looking at developments in the Middle East after Hamas released three Israeli hostages and Israel released 90 Palestinian prisoners on Sunday, the first day of a ceasefire that has halted the 15-month war. .

Cryptocurrency investors remain on edge awaiting executive orders from Trump aimed at reducing regulatory barriers and promoting the adoption of digital assets.

Trump courted crypto campaign cash pretending to be “cryptopresidente” and he launched the token on Friday, which rose above $70 per point for a market value north of $15 billion. It was last traded at around $42, CoinMarketCap showed.

The world’s most popular cryptocurrency, was slightly weaker at $101,434 on Monday. It has increased by 80% since the US election in early November to a record high in December.

The obvious issue is about the policies that Trump will implement on his first day in office. At a rally a day earlier, Trump said he would put tougher limits on immigration.

Goldman Sachs strategists expect that US policy changes will increase the case for dollar strength but warn of near-term risks given the market’s expectation for rapid rate action.

Instead, Goldman’s strategists expect a series of headline-grabbing issues in the interest rate season, similar to Trump’s first presidency. “We think the storm is coming in. We expect it will pay off to be patient.”

The , which measures the US currency against six peers, was 0.16% lower at 109.16 but remained close to the 26-month high of 110.17 touched last week.

The index is up 4% since the election as traders expect Trump’s policies to boost growth but keep prices low, requiring interest rates to remain high for longer.

The euro advanced 0.26% to $1.029775 but remains close to two-year lows last week as tax threats loomed large. Sterling rose 0.27% to $1.2201.

Thierry Wizman, global specialist in foreign exchange and interest rates at Macquarie, said that when it comes to rates, traders are in a “wait and see” position at best, and that’s bad At best, they are not willing to provide disinflation in the United States. benefit of the doubt.

“That means any talk of renewed interest rates … is likely to send the USD higher, as well as (bond) yields.”

Last week’s mildly tepid inflation data, surprise comments from Federal Reserve Governor Christopher Waller and the gradual release of interest rate reports led traders to buy in anticipation of an interest rate cut. twice this year.

Markets now have prices at 42 points of decline in 2025. The changing expectations were measured last week by the dollar which closed its first week of decline in seven.

The yen was last at 156.18 per dollar, not far from a one-month high of 154.98 touched on Friday, with sources telling Reuters that the BOJ is likely to raise its interest rate. this week that prevents a market shock when Trump takes office.

Governor Kazuo Ueda and his deputy said last week that the central bank will debate whether to raise it, indicating an intention to take borrowing costs higher at a policy meeting in Jan. 23-24 unless Trump’s inaugural speech lifts markets.

HSBC’s chief Asia economist Fred Neumann said economic data in Japan suggests that monetary policy normalization is appropriate this year.

The BOJ should have raised rates in December, Neumann said at an HSBC event in Singapore. “So we think now it’s better to do this (increase fees),”