The American dollar has continued to depreciate in value as other currencies gain over low performance of Donald Trump.
The US Dollars
U.S. stocks and the dollar fell on Monday while Asian markets
struggled as President Donald Trump’s failure on healthcare reform
raised questions about his ability to push through tax cuts and fiscal
spending to boost the economy.
Reuters reported that Trump’s inability to get enough support from his own Republican party to “repeal and replace” the
Obamacare health insurance reforms, a major campaign promise, also
spurred a rush to safety assets such as gold and the Japanese yen.
U.S. stock index futures fell 0.7 percent to a six-week low in
heavy volume, suggesting a weaker start on Wall Street later in the day.
So-called “Trumpflation trades” — betting on an extended
recovery in the U.S. and global economies and related assets such as
commodities — came under heavy selling pressure.
“Markets have had a good run recently and this is a good opportunity for profit taking across counters,” said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million under management.
But Wong said the selloff is likely to be limited as cashed-up investors waited on the sidelines.
MSCI’s broadest index of Asia-Pacific shares outside Japan was
broadly flat after posting its first weekly decline last week in three
weeks.
Japan’s Nikkei fell 1.5 percent as the yen rebounded in the face of renewed U.S. dollar weakness.
Rising U.S. policy uncertainty also raised concerns that a recent
pick-up in global business and consumer sentiment, particularly in Asia,
would start to fade.
In terms of relative valuations, U.S. stocks are trading well above
their historical averages while Asia stocks are still broadly in line
despite a recent bounce.
“Any big pull back in markets would be an opportunity for long term investment in a region where potential is still intact,”
said Nicholas Yeo, head of China/Hong Kong equities at Aberdeen Asset
Management in Hong Kong, part of a team that manages $374 billion in
assets as of end-December 2016.
The dollar fell to a near two-month low against a basket of currencies.
The dollar index was down 0.3 percent at 99.287 its lowest since Feb. 2.
It had risen to a 14-year high near 104.00 early in January when
expectations for significant stimulus under the Trump presidency were at
their peak.
“There isn’t much going for the dollar right now and the market will be bracing for its further decline.” said Shin Kadota, senior strategist at Barclays in Tokyo.
Fresh off the defeat on U.S. healthcare legislation on Friday, the
White House warned rebellious conservative lawmakers on Sunday that they
should get behind Trump’s agenda or he may bypass them on future
legislative fights, including tax reform.
The Republican head of the tax-writing committee in the House of
Representatives said he hoped to move a tax bill through his panel this
spring.
The euro was 0.45 percent higher at $1.0847 EUR= following a rise to $1.0849, its strongest early December.
U.S. Treasury yields were trading near one-month lows with ten-year
bonds trading near 2.36 percent, its lowest levels since Feb. 28.
Shanghai Futures Exchange copper slid by 0.7 percent to 46,680 yuan
($6,785) a tonne while Australia’s benchmark metals and mining index
declined as much as 1.7 pct, its lowest since March 14.
Oil prices were broadly flat as investor concerns lingered that
OPEC-led supply cuts were not yet reducing record U.S. crude
inventories.
U.S. crude was trading slightly higher at $48.15 per barrel.
Safe-haven gold perked up, rising to $1,253 an ounce.
-Reuters