Investing.com - The dollar weakened to the lowest levels in more than two months as concerns of drastic changes to the global trade regime by President Donald Trump caught investors concerned about prospects oftit-for-tat retaliations on imports and exports.
The U.S. dollar index, which measures the greenback against a basket of currencies, was last quoted down 0.81% to 99.95, the first dip below 100 since mid-November. USD/JPY changed hands at 112.81, up 0.10%, while AUD/USD traded at 0.7582, down 0.03%.
"Investors are nervous due to Trump's protectionism policies and their hope is that his tax cut policies could perhaps save the day for them," said Naeem Aslam, chief market analyst at ThinkMarkets, in a note on Tuesday.
Overnight, the dollar dropped on Monday on growing concerns that the multilateral trade regime will see sharp changes under Trump from a proposed border tax to potential other actions on import tariffs.
Trump addressed U.S. manufacturing executives with a repeated promise to impose a border tax on firms that import products into the United States after moving American factories overseas and announced the country had abandoned the Trans-Pacific Partnership trade pact among a dozen nations. Trump's promises of tax cuts and higher federal spending continue to hold the market's attention, but details are sparse.
Trump also said Sunday he would start talks with Mexico and Canada to renegotiate the North American Free Trade Agreement (NAFTA).
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.
Meanwhile, the Mexican peso, USD/MXN, was down 0.32% at 21.3160.