By Ankur Banerjee
SINGAPORE (Reuters) – The dollar was on the defensive at the start of a pivotal week on Monday as Donald Trump returns to the White House, with his inauguration speech later in the day the main focus for investors hoping to decipher his immediate policies .
The yen strengthened, clinging to a one-month high hit last week, as traders bet the Bank of Japan will raise its key interest rate this week, raising borrowing costs in the short term to levels not seen since the global financial crisis of 2008.
Trading volume is expected to be low due to the closure of U.S. markets for the Martin Luther King Jr. Day holiday.
Cryptocurrency investors remain in party mode, awaiting Trump’s executive orders aimed at reducing regulatory hurdles and promoting widespread adoption of digital assets.
Trump courted crypto campaign money by promising to be a “crypto president” and launched a digital token on Friday, which soared above $70 at one point for a market value north of $15 billion of dollars. It was last trading around $58, CoinMarketCap showed.
Bitcoin, the world’s best-known cryptocurrency, was slightly weaker at $102,550 on Monday. It has jumped 80% since the US elections in early November, reaching a record high last month.
The focus is on policies that Trump will implement on his first day in office. At a rally Sunday, Trump said he would impose strict limits on immigration.
Goldman Sachs strategists expect U.S. policy changes to support dollar strength, but warn of near-term risks from market expectations for quick action on tariffs.
Instead, Goldman strategists are anticipating a series of headline-grabbing news stories over time on tariffs, similar to Trump’s first presidency. “We think the storm is coming. We think it will pay to be patient.”
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The dollar index, which measures the U.S. currency against six of its peers, was down 0.16% at 109.16, but hovered near a 26-month high of 110.17 reached during the week. last.
The index has risen 4% since the election, with traders expecting Trump’s policies to boost growth but also be inflationary, requiring higher interest rates for a longer period of time.
The euro rose 0.26% to $1.029775, but remained close to a two-year low hit last week as tariff threats loomed. The British pound rose 0.27% to $1.2201.
Thierry Wizman, global FX and interest rate strategist at Macquarie, said that when it comes to tariffs, traders are at best in a “wait and see” mode and, at worst, reluctant to give priority to disinflation in the United States. benefit of the doubt.
