Tokyo - The dollar wallowed near
seven-week lows in Asian trade on Tuesday, pressured by concerns
about the impact of U.S President Donald Trump's protectionist
trade stance.
The dollar index, which tracks the greenback against a
basket of six major peers, slipped 0.1 percent to 100.040
, after falling to 99.899 on Monday, its lowest since December 8.
The dollar was up 0.1 percent at 112.84 yen but
notched a low of 112.52 earlier in the session, its weakest
since Nov. 30, and well below its overnight high of 114.45.
Trump formally withdrew the United States from the now
11-nation Pacific Rim Trans-Pacific Partnership (TPP),
distancing America from its Asian allies. He has also said he
intended to renegotiate the NAFTA free trade agreement between
the United States, Canada and Mexico.
"The market doesn't like this increased protectionist
stance. For now, at least, it's reassessing the impact of that
relative to the pro-investment stance that drove the US dollar
higher," said Sue Trinh, head of Asia FX strategy at Royal Bank
of Canada in Hong Kong.
"It's now just watching and waiting, with headline risk, to
see Trump's first 100 days as we get greater clarity around his
policies and around his cabinet, all of these are likely to
inject greater volatility into the market," she said.
Lower US Treasury yields also undermined the dollar. The
benchmark 10-year yield posted its biggest one-day drop in more
than two weeks as concerns about the fallout of Trump's tough
stance on trade spurred safe-haven demand for bonds.
"We saw dollar weakness in conjunction with those falling
yields, and it led to a strengthening of the yen," said Bill
Northey, chief investment officer of the private client group at
US Bank in Helena, Montana.
"Much of it was based on non-economic news. We saw the US,
through executive action, withdraw from the TPP, which brings up
some broader questions about the degree of trade protectionism
that we might see out of the new administration," he said. "That
certainly played into today's activity."
Trump's nominee for Treasury Secretary Steven Mnuchin was
quoted by Bloomberg as saying that an excessively strong dollar
was negative in the short term, which put additional pressure on
the dollar.
Mnuchin has told senators that he would work to combat
currency manipulation but would not give a clear answer on
whether he currently views China as manipulating its yuan,
according to a Senate Finance Committee document seen by Reuters
on Monday.
China's yuan firmed against the dollar on Tuesday after the
central bank fixed the official yuan midpoint at the
strongest level in more than two months, in the wake of the
dollar's broad slide.
Also adding to investors' risk-averse mood, the Trump
administration vowed on Monday that the United States would
prevent China from taking over territory in international waters
in the South China Sea, something Chinese state media has warned
would require Washington to "wage war".
The euro edged down 0.1 percent to $1.0754, after
earlier touching $1.0774, its strongest level since December 8.
The dollar's weakness gave an additional lift to sterling,
which scaled six-week peaks as investors bet Britain's Supreme
Court would rule later on Tuesday that the government needs
parliamentary approval to trigger formal talks about the
country's exit from the European Union.
The pound was slightly lower on the day at $1.2520
after earlier touching $1.2538, its loftiest level against the
dollar since December 15.