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Forex

Trump's speech boosts yen as market awaits clarity

Protectionist tone raises uncertainty over economic outlook

TOKYO -- The yen strengthened against the dollar Monday in response to the inaugural address Friday by U.S. President Donald Trump, who reiterated his "America first" stance while making no mention of eagerly awaited stimulus measures.

The Japanese currency appreciated to the lower 113 range at one point Monday, gaining nearly 2 yen from Friday's level, amid growing uncertainty about the new administration's plans for the economy.

Many market players expressed disappointment with the speech, which not only failed to touch on measures such as infrastructure spending and tax cuts, but also was filled with protectionist rhetoric. "There were scenarios where expectations for economic growth would have soared right after the inauguration," but Trump sidestepped the stimulus issue, said Masahiro Fukuda of FIL Investments (Japan).

Falling long-term Treasury yields sent the dollar dropping against the yen. Concerns that Trump aims to rein in the greenback's strength played a role as well.

The Nikkei Stock Average fell 246 points from Friday's close, ending at 18,891, with export-oriented shares seeing particularly heavy selling. The benchmark index had gained 10% since the November election amid hopes that a softer yen would boost earnings. Kyoya Okazawa of BNP Paribas Securities (Japan) noted a temporary upswing in selling to take profits.

Trump is expected to lay out policy plans in February, and investors likely will watch for clues until then.

(Nikkei)

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