Dollar slips after Trump's protectionist address, Asia shares resilient

The dollar slipped broadly on Monday after U.S. President Donald Trump struck a protectionist tone in his inauguration speech, offsetting optimism that he will follow through on promises of tax cuts and other stimulus.

Japan's Nikkei dropped 1.1 percent while shares in Australia dropped 0.7 percent after the Trump administration, on its first day in office, declared its intention to withdraw from the Trans-Pacific Partnership (TPP), a 12-nation trade pact that Japan and Australia also have signed up for.

Other Asian shares were resilient, however, in part due to a relief that there was no negative surprises, with Trump refraining from labelling China as a currency manipulator for now, an accusation he made while campaigning.

Hong Kong shares rose 0.6 percent and Taiwan shares rose 0.8 percent, helping to boost MSCI's broadest index of Asia-Pacific shares outside Japan 0.4 percent.

U.S. stock futures dipped 0.2 percent, erasing gains made on Friday.

In his inaugural address, Trump pledged to end what he called an "American carnage" of rusted factories and vowed to put "America first", laying out two simple rules - buy American and hire American.

Trump also said on Sunday he plans talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement (NAFTA).

"The market is getting nervous about the possibility that the world's trade might shrink," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank in Tokyo.

"Many of his policies, including tax cuts and infrastructure spending, need approval from the Senate and that (may not be) easy," he said. "The markets that had been led by expectations on his policy since the election are now the dragged down by the reality."

The dollar had soared late last year on expectations that Trump's pledges to cut taxes and hike infrastructure spending would boost the U.S. economy, but it has since lost steam.

The dollar fell as much as 1.1 percent against the yen to 113.435 yen, edging towards its seven-week low of 112.57 yen touched on Wednesday.

The euro gained 0.4 percent to $1.0746, its highest level since Dec. 8.

Most emerging market currencies gained.

The Mexican peso, which has weakened the most on Trump's protectionist and anti-immigration stance, rose 0.6 percent to a two-week high of 21.44 per dollar. The rise came after its 1.7 percent gains on Friday, its biggest in two months.The 10-year U.S. Treasuries yield fell to 2.432 percent, after having risen briefly on Friday to 2.513 percent, its highest since Jan. 3.

The two-year yield, which is more sensitive to the Fed's policy outlook, dropped sharply to 1.180 percent from Thursday's three-week high of 1.250 percent, giving back much of gains made after Wednesday's upbeat comments from Federal Reserve Chair Janet Yellen.

Oil edged up after statements over the weekend from OPEC and other producers that they have been successfully implementing output cuts, but gains were limited by a surge in U.S. drilling.

International benchmark Brent crude futures rose 0.2 percent to $55.58 per barrel, building on Friday's 2.5 percent gains.