The dollar slid broadly on Monday after US President Donald Trump struck a protectionist tone in his inauguration speech, undermining optimism over the US economy spurred by his promises of tax cuts and other stimulus.

Japan's Nikkei dropped 1.1 per cent, while shares in Australia dropped 0.8 per cent 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.

US stock futures dipped 0.3 per cent, erasing gains made on Friday.

European shares were expected to fall, too, with spread-betters looking to a drop of 0.4 per cent in Britain's FTSE and 0.3 per cent in Germany's DAX.

Other Asian shares were more resilient, however, in part due to the dollar's weakness and 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.

“At least, there was no negative news this weekend, like a border tax or the currency manipulator, even though they could come up in the future,” said Yukino Yamada, senior strategist at Daiwa Securities.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent, with Taiwan shares leading the gains and coming just shy of 1-1/2-year highs.

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 had 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 US economy, spurring inflation and higher interest rates.

But optimism is starting to fade as details of his tax policies remained sketchy. It is not clear if the Congress will agree to any plan that could drastically increase budget deficits.

“If all of Trump's tax proposals would be implemented, that alone would increase the deficit by more than two percentage points of GDP. It's questionable if the Republicans will agree to that. Any fiscal stimulus will be a mild one,” said Hiroko Iwaki, senior strategist at Mizuho Securities.

The dollar fell as much as 1.2 per cent against the yen to 113.26 yen, edging towards its seven-week low of 112.57 yen touched on Wednesday.

The euro gained 0.5 per cent to $1.0754, its highest level since December 8.

Emerging market currencies gained, with South African rand gaining 0.8 per cent.

The Mexican peso, which has weakened the most on Trump's protectionist and anti-immigration stance, rose 0.8 per cent to a two-week high of 21.415 per dollar.

The rise came after its 1.7 per cent gains on Friday, its biggest in two months.

Gold hit a two-month high of $1,219.3 per ounce.

The 10-year US Treasuries yield fell to 2.435 per cent, after having risen briefly on Friday to 2.513 per cent, its highest since January 3.

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

Oil steadied after Friday's gains, as support from statements over the weekend from OPEC and other producers that they have been successfully in implementing output cuts were offset by a surge in US drilling.

International benchmark Brent crude futures stood at $55.47 per barrel, little changed after Friday's 2.5 per cent gains.

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