The US dollar fell to a seven-week low against a basket of key world currencies on Monday and global stock markets declined amid investor concerns over protectionist rhetoric by US President Donald Trump.
US Treasury yields dipped and gold rallied as demand for safe-haven assets was boosted by Mr Trump’s stance on trade.
Yesterday, President Trump told US manufacturing executives he would impose a hefty border tax on firms that import products into the United States after moving American factories overseas.
Fears of a protectionist White House, and scant details on proposed tax cuts, infrastructure spending and deregulation, have prompted some investors to reassess the level of possible future government stimulus to bolster the US economy.
The dollar index, which measures the greenback against six major rivals, was down 0.51 per cent at 100.23.
A steep rally in the dollar following Trump’s election victory in November had been spurred by expectations the new administration would focus on pro-growth fiscal stimulus, tax cuts, and regulatory reform that would likely lift inflation and prompt the US Federal Reserve to raise rates more quickly this year.
The safe-haven yen has been the main beneficiary of recent US political uncertainty, rising for a second session against the dollar.
MSCI’s world index, which tracks shares in 46 countries, was down 0.06 per cent. The index fell as US stocks slipped.
The Dow Jones Industrial Average fell 62.06 points, or 0.31 per cent, to 19,765.19, the S&P 500 lost 9.6 points, or 0.42 per cent, to 2,261.71, and the Nasdaq Composite dropped 18.59 points, or 0.33 per cent, to 5,536.75.
Among individual stock movers, shares in Qualcomm Inc have dived almost 15 per cent after it was sued by Apple on Friday.
European shares fell, weighed down by banks and a profit warning at filter products maker Essentra.
Europe’s broad FTSEurofirst 300 index was down 0.55 per cent at 1,424.53.
In bond markets, US Treasury yields slipped ahead of $88 billion in government debt supply this week as investor jitters over Mr Trump’s tough stance on trade spurred safe-haven demand for bonds.
The US 10-year note was up 14/32 in price to yield 2.417 per cent, compared with 2.467 per cent late on Friday.
Meanwhile, oil prices fell as signs of a strong recovery in US oil drilling activity outweighed news that Opec and non-Opec producers were on track to meet output reduction goals set in December.
Brent crude was down 0.32 per cent at $55.3 a barrel, while US crude was down 0.75 per cent at $52.82.
Gold rose to the highest in two months as uncertainty over President Trump’s economic policies led investors to reach for safe-haven assets.
Spot gold was up 0.57 per cent to $1,216.51 an ounce.