Dollar falls and stocks rise as Trump’s second term dawns

By Nell Mackenzie and Tom Westbrook

LONDON/SINGAPORE (Reuters) – The dollar drifted lower and stocks were cautiously positive on Monday as investors awaited a flurry of policy announcements expected in the first hours of Donald Trump’s second presidency and eyed a rise rates in Japan at the end of the week.

Trump takes the oath of office at noon Eastern Time (1700 GMT), and promised a “brand new day of American strength” at a rally on Sunday.

He immediately stoked expectations for a series of executive orders and, in a reminder of his unpredictability, launched a digital token on Friday, which soared above $70 before sliding to around $50 as traders grew restless.

As Monday is a holiday in the United States, the first reactions to his inauguration on the financial markets could be felt on the foreign exchange markets, then on Asian trade on Tuesday.

European stocks rose slightly at the open, supported by banking and technology stocks. The pan-European STOXX 600 index rose 0.1%, France’s CAC 40 rose 0.2%, Britain’s FTSE rose 0.3% and Germany’s DAX was flat.

“The fall in Treasury yields has revived the equity markets, with European indices doing particularly well,” indicates a note from the Edmond de Rothschild group.

Yields on shorter-term euro zone bonds stabilized at 09:23 GMT.

“Trump dominates everything as far as our direction is concerned,” Kit Juckes, chief foreign exchange strategist at Société Générale, said in his morning note, referring to markets in general and noting that the positions of traders betting on a rise of the dollar against other currencies had reached their highest level since. 2022.

The dollar is up more than 8% against the euro since September and at $1.0309, it is not far from last week’s two-year high. But prices are so high that some analysts say a more gradual start to U.S. tariff hikes could attract some sellers.

Trump has threatened to impose tariffs of up to 10% on global imports and 60% on Chinese goods, as well as a 25% import surcharge on Canadian and Mexican goods, duties which he said trade experts, would disrupt trade flows, increase costs and lead to retaliation.

The Canadian dollar hit its lowest level in five years on Monday, at C$1.4474 per dollar. The Mexican peso reached its lowest level in 2 and a half years on Friday, at 20.94 per dollar. (FRX/)

Bitcoin jumped 4%, hitting a record high of $108,943, while the new cryptocurrency created by Trump and launched on Friday – known as $TRUMP – soared to almost $12 billion in market value, attracting billions of dollars in trading volume. Melania Trump’s cryptocurrency launched on Sunday reached a market capitalization of $1.9 billion.

FOCUS CHINA

China is the target of the harshest potential trade taxes. Investors welcomed better-than-expected Chinese growth data and a Friday phone call between Trump and Chinese President Xi Jinping that left both optimistic.

The story continues