Published: Wed, January 25, 2017
Economy | By Melissa Porter

Dollar sinks below ¥113.50 in Tokyo as protectionist fears take hold

The dollar extended losses from Friday when U.S. president Donald Trump's inauguration speech offered scant details on his fiscal policies while emphasising an "America first" approach to foreign policy, spurring concerns of rising trade protectionism.

But Trump's first news conference since winning the election and his "America First" inaugural speech offered scant detail on his planned stimulus and fuelled concerns that Trump's protectionism would harm the USA economy.

London's first trading session with Donald Trump leading the Free World started badly.

On Monday, Trump told USA manufacturing executives he would impose a hefty border tax on firms that import products into the United States after moving American factories overseas. The euro was up 0.4 percent at $1.0747, on course for its seventh daily rise in the last nine.

The euro, which had looked as if it was heading toward parity with the dollar at the end of 2016, has rebounded above $1.07 and hit seven-week highs of $1.0774 in early Asian trading, though by 1220 GMT it was 0.2 percent down on the day at $1.0745.

The euro gained 0.5 per cent to $1.0754, its highest level since December 8. The index fell as US stocks slipped.

Trump said Monday the US would impose a "very major" border tax on companies that move some operations overseas.

Dow Jones closed down by 0.13 percent, S&P 500 ended down 0.26 percent, Nasdaq finished the day down by 0.03 percent.

Oil prices fell 1 percent on Monday as signs of a strong recovery in USA drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals.

Sentiment had taken a knock on Monday when U.S. Treasury Secretary nominee Steven Mnuchin told senators that he would work to combat currency manipulation but would not give a clear answer on whether he thought China was manipulating its yuan.

The 10-year U.S. Treasuries yield fell to 2.432 per cent, after having risen briefly on Friday to 2.513 per cent, its highest since January 3.

Brent crude settled down 26 cents, or 0.5 percent, at $55.23 a barrel.

The EUR USD exchange rate reached a new monthly high this morning as investors were unimpressed by Donald Trump's speech at his inauguration as the 45 president of the United States.

European stocks made modest gains as the data helped bolster a 2-1/2 year high in commodity stocks and as merger talk swirling around two of Italy's big insurers fuelled a 1 percent jump in shares in Milan.

Worldwide benchmark Brent crude futures rose 0.2 per cent to $55.58 per barrel, building on Friday's 2.5 per cent gains.

Spot gold was up 0.6 percent at $1,216.33 an ounce by 3:22 p.m. EST (2022 GMT), after tapping $1,219.43, its highest since November 22.

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