US dollar slides, stocks retreat as markets react to Trump’s immigration ban
Offshore yuan strengthens 0.05 per cent against the US dollar
The US dollar slid against major currency rivals on Monday, while Asian markets and US stock futures both retreated, as investors fretted over US President Donald Trump’s new immigration ban and disappointing US economic growth data over the weekend.
The greenback weakened significantly against a basket of currencies, including the Japanese yen, the euro, the British pound, and the Chinese yuan, after huge protests erupted across the US in response to Trump signing an executive order Friday suspending the entry of all refugees for 120 days and temporarily banning people from entering the US from seven Muslim-majority nations.
The dollar briefly plunged 0.7 per cent against the Japanese yen to a session low of 114.27. It traded at 114.87 on Monday afternoon, down 0.2 per cent.
The greenback also fell as much as 0.4 per cent versus the euro to 1.074. It rebounded slightly to 1.0698 in the afternoon, still lower by 0.01 per cent from the previous close.
Against the British pound, the dollar dropped up to 0.4 per cent to touch a low of 1.2601 earlier in the day. It was down 0.06 per cent to 1.2547 in the afternoon trading.
In the offshore yuan market, the dollar traded lower for most of the session, but recovered losses later in the day. It bought 6.8715 yuan in the afternoon, stronger by 0.03 per cent. The domestic yuan market was closed for the Lunar New Year holidays.
Asian shares and US stock futures both retreated as jitters hit investors’ risk appetite. Japan’s Nikkei Average ended down 0.5 per cent at 19,368.85, and Australia’s S&P/ASX 200 declined 0.9 per cent to close at 5,661.50. The S&P 500 and the Dow futures both headed lower by 0.4 per cent in the pre-market trading.
“The global reaction [to Trump’s travel ban] has been one of universal condemnation,” said Stephen Innes, a currency senior trader at Oanda Asia Pacific.
“The fear here is that the market may start to think that personal vendetta is clouding the Oval Office judgment and they could express a huge vote of non-confidence through the markets,” he said.
“The increase in civil unrest alone should be a concern for investors, and with a lack of clarity on the economic policy front, markets will be cantankerous early in the week as they’re completely uncertain of what’s next from President Trump on the geopolitical landscape,” he added.
Also unsettling the market was gross domestic product (GDP) data, which showed US economic growth slowed more than expected to 1.9 per cent in the October-to-December period, down from 3.5 per cent in the third quarter.
Nonetheless, Innes said the dollar should regain solid ground quickly, as Trump’s immigration stance is “not economically disruptive to the scale where it will dampen Wall Street’s current momentum”.
Financial markets in Hong Kong, mainland China, Singapore, and Malaysia were closed Monday for the Lunar New Year holidays.
Hong Kong markets will resume trading on Wednesday, while mainland markets will open on Friday.