Investing.com - The dollar was trading at six-week lows against a basket of the other major currencies on Monday at the start of President Donald Trump’s first full week in office amid concerns over the lack of clarity on his economic policies.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.54% to 100.23, the lowest level since December 8.
The index climbed around 3.5% since Trump’s election win in November, buoyed by expectations that his pledges to cut taxes and hike infrastructure spending would spur growth in the U.S. economy, leading to inflation and a faster pace of interest rate hikes.
But the index has fallen 1.9% so far this month as the lack of economic policy detail and recent remarks in which he said the U.S. dollar was too strong weighed.
In his inauguration speech on Friday, Trump said his administration would put "America first" and also promised new roads, bridges and highways.
But market sentiment was hit by the negative tone of the speech, which underlined uncertainty over how Trump will govern.
On Monday, Trump said he is going to cut taxes massively for middle class and companies.
He also is reported to have told a number of U.S. chief executives that companies will get fast approval to build new factories in the U.S., but those that move abroad will face major border taxes.
The dollar was sharply lower against the traditional safe haven yen, with USD/JPY trading at 113.07, off 1.36% for the day.
The euro rose to five-week highs against the dollar, with EUR/USD climbing 0.39% to 1.0744.
Sterling also hit five-week highs as the dollar sold off, with GBP/USD up 0.96% to 1.2493.
Traders were looking ahead to Tuesday’s U.K. Supreme Court ruling on whether the government will need parliamentary approval to initiate Britain’s exit from the European Union by triggering Article 50 of the Lisbon Treaty.
Meanwhile, the Mexican peso added to Friday’s strong gains after Trump’s inauguration speech didn't specifically mention Mexico.
USD/MXN was down 0.75% at 21.42 after ending Friday’s session down 1.64%.
The Mexican peso has been hard hit by fears over potential changes to U.S. trade policy under the Trump administration.
Elsewhere in emerging markets, the Turkish lira pushed higher but remained under pressure ahead of a critical central bank meeting on Tuesday in the wake of a steep decline in the currency since the start of the year.
USD/TRY was trading at 3.7572, down 0.3% from Friday’s close.