Investing.com - The dollar fell more than 1% against the safe haven yen on Monday as the travel ban put in place by President Donald Trump added to concerns over the potential economic ramifications of the new administration's policies.
USD/JPY was down 1.12% at 113.78, retreating from Friday’s one-week highs of 115.37.
Trump signed an executive order on Friday that curbed immigration from seven predominantly Muslim countries, adding to questions over the destabilizing impact of the new administration's protectionist policies.
The order triggered legal challenges, international criticism, widespread protests and confusion over its implementation at airports.
Sentiment on the greenback was also hit after data on Friday showing a sharp slowdown in U.S. fourth quarter growth prompted speculation that the Federal Reserve will avoid hiking interest rates too quickly.
The Fed, which is to hold its next policy meeting on Wednesday, isn’t expected to raise interest rates, but investors are keen to hear how it views the economic outlook and the future path of interest rates.
Data on Monday showed that U.S. consumer spending increased in December, rising 0.5% after a 0.2% increase in November.
Personal income rose 0.3% last month after edging up 0.1% in November.
A separate report showed that U.S. pending home sales rose by 1.6% in December, ahead of forecasts for a 1.1% increase.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 100.45 after falling to overnight lows of 100.14.
The euro remained weaker after a senior European Central Bank official said Monday it will probably review its policy stance in June, but stop short of any decision on winding down stimulus.
EUR/USD was down 0.13% at 1.0684, off lows of 1.0620.
Ewald Nowotny said the ECB will probably wait for its June economic forecasts before reassessing its policy stance, but that no decision will be made about tapering its economic stimulus program.
Meanwhile, sterling was lower against the dollar for the third straight session, with GBP/USD down 0.23% at 1.2519 ahead of the Bank of England’s upcoming policy meeting and inflation report on Thursday.
The BoE is expected to revise up its outlook for inflation and growth, but uncertainty over Brexit is expected to cloud the outlook.
The pound was also lower against the euro, with EUR/GBP rising 0.21% to trade at 0.8538.