Tokyo: The dollar wallowed near seven-week lows in early 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 100.060, after falling to 99.899, its lowest since Dec. 8.
The dollar was up 0.2 percent at 112.92 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 was poised to sign executive orders as early as Monday intended to renegotiate the free trade agreement between the United States, Canada and Mexico, according to media reports, and also pull out of the 11-nation Pacific Rim Trans-Pacific Partnership (TPP).
Lower U.S. 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 U.S. Bank in Helena, Montana.
“Much of it was based on non-economic news. We saw the U.S., 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.
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 $1.0759, after earlier touching $1.0774, its strongest level since Dec. 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 higher on the day at $1.2534 its loftiest level against the dollar since Dec. 15.