Dollar strong, stocks move higher ahead of second Trump term Reuters

by Tom Westbrook

SINGAPORE (Reuters) – The dollar strengthened and Asian stock markets were cautiously positive on Monday as investors awaited policy announcements expected in the first hours of Donald Trump’s second term as president and saw prices rise in Japan over the weekend. .

Trump was sworn in at noon Eastern Time (1700 GMT) and promised a “new day of American strength” at a rally on Sunday.

He added that he expects to issue more executive orders immediately, and as a reminder of his anonymity, he launched a digital token on Friday that rose to trade above $70 at one point. Total market value north of $15 billion.

Monday is a US holiday, so the first reactions to his inauguration in traditional financial markets are likely to be heard in foreign currencies, where traders are focused on Trump’s tariff policy, and then in Asian trade on Tuesday.

U.S. equity futures were fractionally weaker in Asian morning Monday, as the dollar rallied on strong U.S. data since September and as Trump’s ultimately successful political campaign gained momentum.

1% rose. ()

Last week posted its biggest weekly percentage gain since early November and the Nasdaq’s biggest since early December on some positive inflation data.

The dollar is up nearly 14% against the euro since September, not far from last week’s two-year high of $1.0273. But it’s so expensive that some analysts say a gradual start to U.S. tariff increases could appeal to some sellers.

“A strong start to Trump’s new term could fray nerves and provide additional support for the dollar,” said Peter Dragevich, currency strategist at Korpay.

“On the other hand, based on what appears to be already baked in, we think a more measured approach, as Trump has done since taking office in 2017, could ease fears and weaken the dollar.”

Trade experts say Trump will impose tariffs of up to 10% on global imports and 60% on Chinese goods and 25% on Canadian and Mexican goods.

The Canadian dollar touched a five-year low of C$1.4486 on Monday. The Mexican peso hit a 2-1/2-year low of $20.94 on Friday. (FRX/)

It dipped early in the Asian day but remained above $100,000. The benchmark 10-year Treasury yield closed at 4.61% on Friday, up nearly 100 basis points in four months. (USA/)

China’s focus

China has been the target of heavy trade tariffs. Investors were buoyed by recent better-than-expected Chinese growth data and Friday’s phone call between Trump and Chinese President Xi Jinping.

“Essentially, everyone is waiting for these trade talks to start and to see what kind of attitude Xi Jinping has with Trump,” said Ken Peng, head of Asia investment strategy at Citiwealth.

“The relationship between the two princes has become very important as a guide to policies.”

Chinese equity markets rose last week and futures pointed to modest gains at the open for Hong Kong shares.

The yuan is expected to adjust slowly to any trade policy changes and was firmer at $7.3355 in offshore trade.

Sensitive to trade flows and the Chinese economy, the Australian dollar has avoided five-year lows and Commonwealth Bank strategist Joe Capurso said it could test resistance at $0.6322 if Trump’s policy changes fall short of market expectations. The last day was at $0.62.

The Japanese yen rallied last week as comments from Bank of Japan policymakers on Friday were seen as a hint of possible rate cuts.

It last stood at 156.17 to the dollar, and rate markets had an 80% chance of a 25 basis point increase.

In commodities, gold hovered at $2,694 an ounce and futures rose to $81.21 a barrel.