• A weaker USD as investors fear protectionism
  • CAD tracks oil as yen remains strong
  • Deal or no deal: UK first in line to meet the new president
  • Watch for more Trump headlines

The dollar continues to march lower as investors digest Trump’s inaugural speech from Friday. The president’s speech focused on “America first” and protectionism, a crux of his campaign that markets were largely discounting, fixated more so on promises of fiscal spending and tax cuts. As the rosy glow of their expectations fade to fear that protectionism will take prominence in the Trump administration, the “Trump trade” may continue to undermine the USD.

It’s a big week for the UK as Prime Minister Theresa May will be the first world leader to meet with President Trump this Friday. The media is abuzz with speculation of the two parties actioning a deal, as President Trump said he would like to come to quick agreement on a trade deal, a sentiment that the prime minister has echoed. Alongside the focus on US politics, this could spur volatility for the pound and the dollar through the week.

CAD stands apart from many of its major peers today, falling against the USD as oil prices slip despite broad weakness in its US neighbor. The yen continues to be supported as investors shy away from risky assets, keeping USDJPY is down ~1%. The Mexican peso strengthening for a second day despite Trump’s call to renegotiate NAFTA. Further noise on this front could push USDMXN accordingly.

As the week unfolds, there may be clarity or further contention around the president’s position as he joins the House and Senate Republicans’ annual retreat on Thursday/Friday. With investors already on edge, prepare for strong reactions to any new headlines.

EURUSD:   Retracing some of the overnight losses, euro remains underpinned by broad USD weakness.

GBPUSD:  The pound if one of the chief benefactors of a Trump-led selloff in the USD. GBP/USD at the highest level since last year.

USDJPY: Not comfortable in the lower 113s, the yen remains resilient as investors hold onto their safe-haven assets.

USDCAD: One of the few stories not pivoting around the USD, CAD is being dragged down by lower oil prices.