By Gertrude Chavez-Dreyfuss
| NEW YORK
NEW YORK The dollar slumped to a seven-week low against a currency basket on Monday, weighed by concerns about the early days of U.S. President Donald Trump's administration that have so far been marred by protests, a protectionist inauguration speech, and angry comments on Twitter. The safe-haven yen has been the main beneficiary of U.S. political uncertainty, rising for a second straight session against the dollar. The yen has gained nearly 3 percent since the start of the year.Trump's "America first" message was followed over the weekend by coordinated protests in U.S. cities, testy exchanges between members of his top staff and media and confirmation that key trade pacts were heading for the shredder..All these fed uncertainty about the direction Trump's policy will take and pointed to a bumpy few months ahead for the new president.In late trading, the dollar index, which measures the greenback against six major rivals, fell 0.6 percent to 100.16 led by 1.4 percent drop versus the yen to 113.01 yen JPY=. The dollar's fall against the yen was the largest in more than two weeks.
"There is general unease after Trump's very aggressive, mercantilist, mostly protectionist-focused speech," said John Hardy, head of forex strategy at Saxo Bank in Copenhagen."The fear is that while some specific notions and ideas will be dollar-supportive, a mercantilist approach and Trump's recent mention of currency policy and China's currency policy as being too weak, could trigger the idea that Trump will use (this) policy to bully other nations toward a weaker dollar."
The dollar index .DXY rose about 4.2 percent between Trump's election in November and the end of last year, but has since given back more than 2.5 percent.The dollar's steep rally following Trump's victory was spurred by expectations the new administration would focus on pro-growth fiscal stimulus, tax cuts, and regulatory reform that would likely lift inflation and prompt the Federal Reserve to raise interest rates more quickly this year. Sterling, meanwhile, was the other big gainer, hitting a six-week peak as investors bet Britain's Supreme Court would rule on Tuesday that the government needs parliamentary approval to trigger formal Brexit talks.
It climbed as high as $1.2506 GBP=D4, its strongest level against the dollar since Dec. 16. The pound also rose to a two-week high against the euro. GBPEUR=.The euro was up 0.5 percent at $1.0751, posting its seventh daily rise in the last nine. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli and Lisa Shumaker)
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Updated Date: Jan 24, 2017 02:45:04 IST