The Japanese yen continued to strengthen on Tuesday, with the dollar losing more than 1 percent overnight and continuing to fall during the morning hours. The dollar fell as low as 113.240 yen before recovering slightly to 113.570. Despite the fact that the Bank of Japan announced on Tuesday that it would be remaining steady on its monetary policy, analysts believe that it is U.S. policy that is really driving traders towards safe haven currencies. The BOJ committed itself on Tuesday to steering short-term interests to minus 0.1 percent and to keep the 10-year government bond yield around zero percent.
The dollar index was down slightly during Monday’s Asian session, trading at 100.360. It is expected to post a loss of nearly two percent in January, a marked setback from the gains it enjoyed in the days after Trump first announced his stimulus plan. The euro traded flat at $1.0696 on Monday. The currency is set to show a 1.7 percent gain against the dollar in January.
U.S. markets were volatile on Monday as traders continued to fear that Trump’s protectionist policies may have wider repercussions on the economy. In addition to the tremendous workforce resources that come from immigrants, it is estimated that half of the earnings on the S&P 500 come from overseas, and that closing the United States off to foreign countries will have more negative impacts than originally anticipated. Many CEOs of public companies have already spoken publicly about Trump’s immigration ban and some have even vowed to employ additional immigrants or to establish legal funds for helping immigrants. Investor sentiment as measured by the American Association of Individual Investors fell on Monday to its lowest level since May 2016.