A look at the day ahead in European and global markets from Tom

Westbrook

Markets are looking to the first hours of Donald Trump's

presidency to set the tone for his second term. U.S. markets are

closed for Martin Luther King day, so the immediate focus will

fall on foreign exchange markets and stock and bond futures.

Often, market performance through presidential terms reverts

to more reliable relationships with economic trends, but Trump

tends to inject volatility and has foreshadowed bold policy

shifts.

He is the first President since Grover Cleveland in the late

1800s to serve two non-consecutive terms and his return is being

met with a bout of late trepidation in markets.

With the dollar having steamrolled to multiyear highs in

recent weeks, traders are wondering whether it could beat a

retreat if Trump takes things slowly. They are also questioning

whether tariffs, in fact, are dollar positive or not.

The greenback drifted lower in cautious Asia trade.

Investors have been selling bonds and buying dollars since

the middle of September, anticipating not only that Trump would

boost growth but that his eagerness to raise tariffs, cut taxes

and crack down on immigration may stoke inflation.

He has said he will sign nearly 100 executive orders within

hours of taking office and, at a rally on Sunday, repeated vows

to deport immigrants, slash regulations and unleash energy

resources. He had an apparently friendly phone call with Chinese

President Xi Jinping on Friday.

Trump will take the oath of office at noon, eastern time

(1700 GMT), inside the rotunda of the Capitol building, with

cold weather forcing proceedings indoors for the first time in

40 years.

Trump has underscored his unpredictabilty by saying he would

"save" Chinese social media app TikTok, which had been shut down

in the U.S. on national security grounds by a law that took

effect on Sunday.

On Friday he also launched a digital token, which initially

soared before sinking somewhat after his wife, Melania Trump,

launched a separate token and even some seasoned cryptocurrency

investors started to get uneasy about the speculative surge.

Bitcoin, which has surged more than 45% since Trump's

election, dropped about 3% to $101,800 in another possible hint

that a lot of expectations are already well-priced in the

market.

Key developments that could influence markets on Monday:

- Donald Trump presidential inauguration