* News of Trump seeking big military budget supports dollar
* Trump's speech to Congress awaited for more cues
* Pound struggles after falling on fresh Brexit woes
By Shinichi Saoshiro
TOKYO, Feb 28 The dollar was steady early on
Tuesday, enjoying support after U.S. President Donald Trump
flagged a big boost in government stimulus, and sought a
"historic" increase in military spending.
Trump will ask the U.S. Congress to boost Pentagon spending
in the next fiscal year by $54 billion in his first budget
proposal, a White House budget official said on
"The talk regarding military and infrastructure spending
raised expectations towards Trump's speech to the Congress later
today, lifting the dollar and Treasury yields," said Shin
Kadota, senior forex strategist at Barclays.
The lift for the dollar, however, was limited as the
military spending increase would be accompanied by a cut in the
same amount from non-defense spending, including a large
reduction in foreign aid.
Moreover, investors also took a wait-and-see approach ahead
of Trump's closely-watched Congressional address later in the
day, capping the dollar and crimping overall market activity.
The dollar rallied hard soon after Trump won the U.S.
elections in November, boosted by hopes that he would introduce
large fiscal stimulus and reflationary plans. But the currency
has sagged lately with the Trump administration yet to hammer
out clear specifics.
"It remains to be seen how much the dollar can gain from
Trump's speech, as specifics regarding tax reforms, which is of
key interest to the market, may not be available until March,"
Kadota at Barclays said.
The dollar index against a basket of key currencies extended
the previous day's modest gains and was up 0.1 percent at
101.170 after initially trading as low as 100.690
The greenback was steady at 112.730 yen after rising
0.7 percent overnight, when it had initially plumbed an 18-day
low of 111.920.
The euro was a shade lower at $1.0583, having come
off from a one-week high of $1.0631 scaled the previous day.
A slight ebb in concerns towards the French presidential
election has helped the common currency, which had sunk to a
1-1/2-month low of $1.0494 last week.
The pound fetched $1.2442 after sliding to a 12-day
low of $1.2384 the previous day as talk of another possible
Scottish independence vote added to fears about Britain's future
as it prepares to leave the European Union.
The Australian and New Zealand dollars were little changed
at $0.7675 and $0.7186, respectively.
(Editing by Shri Navaratnam)