Dollar wallowed near seven-week lows in Asian trade on Tuesday, pressured by concerns about the impact of U.S President Donald Trump's protectionist trade stance. The dollar index, which tracks the greenback against a basket of six major peers, slipped 0.1 percent to 100.040, after falling to 99.899 on Monday, its lowest since Dec. 8. The dollar was up 0.1 percent at 112.84 yen but notched a low of 112.52 earlier in the session, its weakest since Nov. 30, and well below its overnight high of 114.45. Trump formally withdrew the United States from the now 11-nation Pacific Rim Trans-Pacific Partnership (TPP), distancing America from its Asian allies. He has also said he intended to renegotiate the NAFTA free trade agreement between the United States, Canada and Mexico. "The market doesn't like this increased protectionist stance. For now, at least, it's reassessing the impact of that relative to the pro-investment stance that drove the U.S. dollar higher," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong. "It's now just watching and waiting, with headline risk, to see Trump's first 100 days as we get greater clarity around his policies and around his cabinet, all of these are likely to inject greater volatility into the market," she said. Lower U.S. Treasury yields also undermined the dollar. The benchmark 10-year yield posted its biggest one-day drop in more than two weeks as concerns about the fallout of Trump's tough stance on trade spurred safe-haven demand for bonds. "We saw dollar weakness in conjunction with those falling yields, and it led to a strengthening of the yen," said Bill Northey, chief investment officer of the private client group at U.S. Bank in Helena, Montana. "Much of it was based on non-economic news. We saw the U.S., through executive action, withdraw from the TPP, which brings up some broader questions about the degree of trade protectionism that we might see out of the new administration," he said. "That certainly played into today's activity." Trump's nominee for Treasury Secretary Steven Mnuchin was quoted by Bloomberg as saying that an excessively strong dollar was negative in the short term, which put additional pressure on the dollar. Mnuchin has told senators that he would work to combat currency manipulation but would not give a clear answer on whether he currently views China as manipulating its yuan, according to a Senate Finance Committee document seen by Reuters on Monday. China's yuan firmed against the dollar on Tuesday after the central bank fixed the official yuan midpoint at the strongest level in more than two months, in the wake of the dollar's broad slide. Also adding to investors' risk-averse mood, the Trump administration vowed on Monday that the United States would prevent China from taking over territory in international waters in the South China Sea, something Chinese state media has warned would require Washington to "wage war". The euro edged down 0.1 percent to $1.0754, after earlier touching $1.0774, its strongest level since Dec. 8. The dollar's weakness gave an additional lift to sterling, which scaled six-week peaks as investors bet Britain's Supreme Court would rule later on Tuesday that the government needs parliamentary approval to trigger formal talks about the country's exit from the European Union. The pound was slightly lower on the day at $1.2520 after earlier touching $1.2538, its loftiest level against the dollar since Dec. 15. Source: CNBC
