iFOREX Daily Analysis : November 22, 2016

 | Nov 22, 2016 03:50AM ET

The dollar gave away some of its recent gains on Monday, as investors moved on to some profit taking. Recent gains were built on expectations of increased fiscal spending and higher inflation under a Trump administration.

Trump said on Monday that he will withdraw the United States from the Trans-Pacific Partnership trade deal on his first day in office, dashing hopes that he may soften his protectionist stance on international trade.

While stock markets have benefited from Trump's promises of deregulation and fiscal spending, his protectionism alarms many investors and could eventually hurt the currencies of countries with large trade deficits such as the United States.

An earthquake of magnitude 7.4 and the subsequent tsunami warning in northern Japan prompted selling of the dollar for safe-haven yen in early trade.

While the earthquake briefly disrupted cooling functions at a nuclear plant, there were no reports of deaths in the hours after the earthquake hit.

The euro held steady at $1.0627, recovering from Friday's low of $1.0569, its lowest since last December.

The British pound remained higher on Monday as the market assesses Prime Minister Theresa May's latest comments on the way Britain will exit from the European Union.

May pledged to address concerns that Britain could fall off a "cliff edge" into uncertain trading conditions when it leaves the bloc.

Today, the UK is to report on public sector borrowing, Canada is to release data on retail sales and the U.S. is to produce a report on existing home sales.

USD/JPY

On Monday, the dollar had reached close to a six-month high of 111.36 yen, following a rise of 10 percent from its Nov. 9 low near 101 yen.

Before its streak ended on Monday, the dollar had risen for 10 straight trading days, as investors bet that increased fiscal spending by the incoming Trump administration would boost inflation and move interest rates higher. An earthquake of magnitude 7.4 and the subsequent tsunami warning in northern Japan prompted some selling of the dollar for safe-haven yen in early trade.

While the earthquake briefly disrupted cooling functions at a nuclear plant, there were no reports of deaths in the hours after the earthquake hit.

Market participants evaluated the impact of the earthquake, saying the dollar had been due for some selling against the yen after rallying sharply over the past two weeks.

Today, the U.S. is to produce a report on existing home sales.