Dollar drops further as rebound stalls amidst continuing Trump woes

Dollar drops further

The dollar goes down lower against the yen and euro as concerns about United States President Donald Trump’s protectionist stance weakened the earlier rebound of the currency.

Going down 0.25 percent, the dollar traded at 113.500 yen after nearing 114.00 for a short while. It saw gains of around 1 percent on the previous day to bounce from an eight-week low of 112.520 as U.S. Treasury yields had reported to have risen.

The euro traded at $1.0733. It had lost about 0.3 percent overnight, sliding from almost a seven-week high of $1.0775.

The dollar index going against several major currencies gave back most of its overnight gains and was down 0.2 percent at 100.180.

The Australian dollar was down 0.4 percent at $0.7548, while the New Zealand dollar changed little at $0.7244.

Shusuke Yamada, chief Japan FX strategist at BOA Merrill Lynch, said that “We retain our view that the dollar is on a longer-term uptrend. But for the moment, skepticism towards the Trump presidency retains the upper hand.”

He further said that “Such skepticism could linger for a while since it will be some time before we get a clear picture of the Trump presidency's fiscal spending and tax plans.”

In the eight weeks following the surprise victory of Trump in the U.S. presidential election in November, the dollar index rose to a 14-year high of 103.82.

Investors expect the Federal Reserve to undergo a series of rate hikes due to the boost in economic growth and inflation brought by Trump’s promised infrastructure spending and tax cut.

The dollar index saw a six-week low of 99.899 on Monday with enthusiasm lessened by Trump’s inaugural speech last week that was focused on trade protectionism.

Chief Forex strategist at Mizuho Securities, Masafumi Yamamoto, said that “The dollar did manage to bounce overnight but it still lacks general direction. I do not see the rebound going much further under such conditions”

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