Dollar tumbles to 7-week tight on Trump uncertainty

NEW YORK (Reuters) – The dollar slumped towards a seven-week low against a currency basket on Monday, weighed by concerns regarding the early days of U.S. President Donald Trump’s administration which use so far been marred by protests, a protectionist inauguration speech, and angry comments on Twitter.

The safe-haven yen may be the main beneficiary of U.S. political uncertainty, rising for a second straight session with dollar. The yen has gained nearly Three percent since the start of the year.

Trump’s “America first” message was followed over the past weekend by coordinated protests in U.S. cities, testy exchanges between individuals in his top staff and media and confirmation that key trade pacts were at risk of the shredder..

All these fed uncertainty regarding the direction Trump’s policy will require and pointed to somewhat of a bumpy several months ahead for the new president.

In late trading, the dollar index, which measures the greenback against six major rivals, fell 0.6 % to 100.16 led by 1.4 % drop as opposed to the yen to 113.01 yen. The dollar’s fall versus the yen was very large in more than a fortnight.

“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 a few specific notions and concepts will be dollar-supportive, a mercantilist approach and Trump’s recent mention of currency policy and China’s currency policy for being too weak, could trigger the idea that Trump can use (this) policy to bully other nations toward a weaker dollar.”

The dollar index rose about 4.2 percent between Trump’s election in November and then the end of not too long ago, but has since payed more than 2.5 %.

The dollar’s steep rally following Trump’s victory was spurred by expectations the popular administration would direct attention to pro-growth fiscal stimulus, tax cuts, and regulatory reform that would likely lift inflation and prompt the federal government Reserve to increase interest rates more quickly this year.

Sterling, meanwhile, was other big gainer, hitting a six-week peak as investors bet Britain’s Top court would rule on Tuesday that the government needs parliamentary approval to trigger formal Brexit talks.

It climbed all the way to $1.2506, its strongest level about the dollar since Dec. 16. The pound also rose to a new two-week high with euro..

The euro was up 0.5 % at $1.0751, posting its seventh daily development of the last nine.