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US dollar extends losses, Asia stocks slide on Trump currency comments

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The US dollar declined on Monday against major currencies to its lowest in more than two weeks after US President Donald Trump criticised the Federal Reserve's tightening policy, while stocks slipped on fears of further trade protectionist measures.

[SYDNEY] The US dollar declined on Monday against major currencies to its lowest in more than two weeks after US President Donald Trump criticised the Federal Reserve's tightening policy, while stocks slipped on fears of further trade protectionist measures.

Mr Trump, on Friday, lamented the recent strength of the US dollar and accused the European Union and China of manipulating their currencies.

The remarks, coupled with Mr Trump's threats to impose tariffs on all US imports from China, triggered a bout of sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings.

Asian stocks followed that lead on Monday with Japan's Nikkei stumbling one per cent. Australian shares were off 0.6 per cent while the New Zealand market was down 0.4 per cent.

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MSCI's broadest index of Asia-Pacific shares outside Japan was up a touch waiting for other markets to open.

Mr Trump's comments also hit the greenback, which was last down 0.2 per cent at 94.25 against a basket of six major peers, and steepened long-term Treasury yields.

"The President's remarks also make it very clear he has a distaste for a stronger dollar, effectively limiting the greenback's ability to perform, at least near term," said Rodrigo Catril, senior forex strategist at National Australia Bank.

The dollar index is so far up 2.4 per cent this year.

A Reuters report on Friday that the Bank of Japan was in unusually active discussions to modify its massive easing also played a role in the tick-up in yields globally.

Benchmark 10-year Japanese Government Bond futures opened weaker on Monday, sending yields to six-month highs. The Reuters report also added to the yen's strength, which was last up 0.3 per cent at 111.07 per dollar.

"The market took the news as a possible sign the anchor at the long end may allow for some natural drift higher," ANZ said in a note to clients.

Investors are now looking ahead to an important meeting on trade between Mr Trump and European Commission President Jean-Claude Juncker at the White House. A breakdown in talks could hit risk sentiment, hurting global equities, analysts said.

The euro climbed for a third straight day to a two-week top of US$1.1746.

In commodities, oil prices were caught between a weakening dollar which supported the market and concerns about US-China trade tensions and supply increases which undermined sentiment.

US crude was last off 3 cents at US$68.24 a barrel after posting its third straight weekly loss. Brent settled at US$73.18, up 11 cents.

REUTERS