Dollar Declines After Trump Offers no Details on Economic Policies

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On Thursday, the greenback slipped, moving back to one-month lows compared to the perceived safe-haven yen, after President-elect Donald Trump’s highly-expected news conference failed to offer information on his promises to increase fiscal spending and reduce taxes.

Donald Trump, who takes office on Jan. 20, did not elaborate on his intended growth policies, and instead took aim at goals that included pharmaceutical companies and U.S. intelligence agencies.

On Wednesday, the dollar declined as low as 114.245 yen, its deepest base point since Nov. 9, and last stood at 114.52, down 0.8% on the day.

“There’s ‘Good Trump’ and ‘Bad Trump’ for the markets. Will ‘Good Trump’ return before the inauguration?” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.

“We need to see if the overnight dollar low holds in today’s Tokyo session,” she added.

The dollar index, which tracks the U.S. currency against a basket of six major counterparts, slipped 0.4 percent to 101.42 (DXY). It had risen to a one-week high on Wednesday, ahead of Trump’s news conference.

The dollar index had increased to its highest levels since 2002 as investors bet Trump’s promises of fiscal expansion and tax reductions would increase progress and inflation, motivating a faster pace of interest rate hikes from the Fed  Reserve and increasing the yield on the dollar.

“Although some investors who missed out on the dollar’s post-election rally were still looking to buy on dips, others were seeking to pare their long dollar positions in case the coming reality of Trump’s administration fail to live up to expectations,” Tokyo market participants said.

The euro added 0.2% to $1.0605, after slipping to a 14-year low of $1.0340 <eur=>the previous week.

But compared to the yen, the euro skidded 0.6% to 121.41 yen (EURJPY=) closing in on its overnight low of 121.275, which was its lowest since Dec. 9.

Lower U.S. Treasury yields also weakened the greenback,  as Trump’s remarks increased the safe-haven appeal of U.S. government debt.

The benchmark yield decline to a one-month lows, as strong demand at an auction also press up prices.

In Asian trading, the yield on 10-year U.S. notes (US10YT=RR) stood at 2.332%, down from Wednesday’s U.S. close of 2.370%.

Bucking the weak greenback trend, the Mexican peso hit a fresh record low against the dollar of 22.0440 pesos on Wednesday, after Trump notified U.S. auto companies would face a high tax for goods made in that country and exported to America.

“The fall is very natural after what Trump has been saying about the Mexican relationship, but I also think that maybe the selling is almost over as he is saying nothing new,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

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