Jamie McGeever

(Reuters) - The outlook for Asian markets for the day ahead.

Financial market trading is set to get off to a strong start on Tuesday for the first full day of U.S. President Donald Trump's second term in office, with Trump's seemingly more cautious approach to tariffs providing an immediate shot in the arm to investor sentiment cardiac.

Trump issued a wide-ranging trade memo on Monday but stopped short of immediately imposing new tariffs on major trading partners, something he had previously said he would do on his first day in office. Instead, trade relationships with China, Canada and Mexico will be assessed and reviewed before he decides what steps to take.

U.S. stock and bond markets were closed Monday for Martin Luther King Jr. Day, but foreign exchange markets were open and the dollar's sharp decline across the board reflected investor relief as Trump appeared to tone down his tariff rhetoric in favor of the United States. A less bellicose approach.

Even if it turns out to be temporary.

The U.S. dollar index fell 1%, its biggest drop since August. Judging from hedge fund positions, the dollar may be poised for a fall - the latest data from the Commodity Futures Trading Commission showed that funds held a net long position in the U.S. dollar worth $35 billion across a range of currencies last week, the most in nine years. the highest level.

The dollar has gained about 10% since September, while U.S. Treasury yields have soared more than 100 basis points, with tightening financial conditions hitting Asia and emerging markets particularly hard. A pause or reversal should relieve this pressure.

U.S. stock index futures rose about 0.4% on Wall Street on Tuesday. Asian markets were already in the lead on Monday, with the MSCI Asia ex-Japan index and the Nikkei 225 both up more than 1%.

Markets around the world will be sensitive to the deluge of headlines likely to come out of Washington in the coming days as the new administration announces policy directives and executive orders. This is going to be a tumultuous week.

Crude oil prices fell further from last week's six-month high, falling for a third straight day as traders await details of Trump's executive order declaring a national energy emergency and pledging to fill strategic reserves.

On the other hand, cryptocurrencies were more active as the self-proclaimed “crypto president” was sworn in, with Bitcoin jumping to a new high of just under $110,000.

Asia's economic calendar is light on Monday, with producer price inflation in South Korea and consumer price inflation in Hong Kong the only major economic indicators. Markets are expected to take cues from headlines in Washington, gains in global stock markets and a dive in the dollar.

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