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Trump assumes presidency at 1700 GMT

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Markets looking for cues on immediate policy action

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Yen near one-month high on BOJ hike bets

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Crypto investors anticipate friendlier regulation

By Ankur Banerjee

SINGAPORE, Jan 20 (Reuters) - The dollar was hovering

near a more than two-year high at the start of a pivotal week on

Monday, as Donald Trump re-enters the White House with an

inauguration speech that will be of primary focus for investors

hoping to decipher his immediate policies.

The Japanese yen strengthened slightly on Monday,

clinging to a one-month high hit last week, as traders wager the

Bank of Japan will hike its policy interest rate this week.

Still, trading is likely to be thin with U.S. markets closed.

Investors are also keeping an eye on Middle East

developments after Hamas released three Israeli hostages and

Israel released 90 Palestinian prisoners on Sunday, the first

day of a ceasefire suspending a 15-month-old war.

Cryptocurrency investors remain in party mode awaiting

executive orders from Trump aimed at reducing regulatory

roadblocks and promoting widespread adoption of digital assets.

Trump courted crypto campaign cash promising to be a "crypto

president" and launched a digital token on Friday, which soared

above $70 at one point for a market value north of $15 billion.

It was last trading around $42, CoinMarketCap showed.

The spotlight is firmly on the policies Trump will enact on

his first day in office. At a rally a day before, Trump said he

would impose severe limits on immigration.

He vowed to repeal "every radical and foolish executive

order of the Biden administration" within hours of assuming the

presidency at noon ET (1700 GMT).

"The new administration indicated it is prepared to take

immediate actions, and there is little reason to doubt it," said

Marc Chandler, chief market strategist at Bannockburn Global

Forex in New York.

"In terms of tariffs, some countries have already signalled

that they are prepared to retaliate... There is talk that Trump

2.0 will hit the ground running with as many as 100 executive

orders planned on day one."

The dollar index, which measures the U.S. currency

against six peers, was at 109.28 in early trade, near the 26

month high of 110.17 touched last week.

The index has risen 4% since the U.S. election in early

November as traders expect Trump's policies to boost growth but

be inflationary, requiring interest rates to stay higher for

longer.

Thierry Wizman, global foreign exchange and interest rates

strategist at Macquarie, said when it comes to tariffs, traders

are in a "wait-and-see" mode at best and, at worst, have been

largely unwilling to give disinflation in the U.S. the benefit

of the doubt.

"That means that any renewed mention of tariffs ... is

likely to send the USD higher, as well as (bond) yields."

Last week's slightly cooler core inflation data, dovish

comments from Federal Reserve Governor Christopher Waller and

reports of tariffs being introduced gradually have led traders

to price in the prospect of two interest rate cuts this year.

Markets are now pricing in 42 basis points of easing in

2025. The shifting expectations weighed last week on the dollar

which clocked its first week of decline in seven.

The yen was last at 156.18 per dollar, not far from the

one-month high of 154.98 touched on Friday, with sources telling

Reuters the BOJ was likely to raise its policy interest rate

this week barring market shocks when Trump takes office.

Governor Kazuo Ueda and his deputy said last week the

central bank will debate whether to hike, signalling an

intention to take borrowing costs higher at a Jan. 23-24 policy

meeting unless Trump's inaugural speech upends markets.

The euro was 0.14% higher at $1.0285 in early

trade but still rooted near a two-year low touched last week,

while sterling rose 0.12% to $1.21825 as traders contended with

gloomy British economic outlook.