* Dollar hit as Trump suffers a big political setback
* Dollar index slides to near 2-mth low
* Dollar/yen hits 4-mth low, euro strongest since early Dec
By Shinichi Saoshiro and Wayne Cole
TOKYO/SYDNEY, March 27 The dollar slid to a near
two-month low against a basket of currencies early on Monday as
concerns mounted about the chances of U.S. fiscal stimulus after
the stinging defeat of President Donald Trump's healthcare
The inability to overhaul the U.S. healthcare system, a
major election campaign promise of Trump and his allies, marked
a significant political setback for the president in a Congress
controlled by his own party.
The blow so early in Trump's term has heightened worries
about the chances of economy-boosting steps being enacted, such
as tax reforms and big spending packages.
"Concerns towards the Trump administration have been
reignited after his healthcare legislation setback. This is
resulting in a bout of risk aversion weighing on the dollar,"
said Shin Kadota, senior strategist at Barclays in Tokyo.
"There isn't much going for the dollar right now and the
market will be bracing for its further decline."
The dollar index against a basket of major currencies was
down 0.3 percent at 99.299 after going as low as 99.292,
its lowest since Feb. 2.
The index had risen to a 14-year high near 104.00 early in
January when expectations for significant stimulus under the
Trump presidency were at their peak.
In a sign of stress for Wall Street stocks, U.S. equity
index futures fell to a six-week low.
The dollar was down 0.8 percent at 110.470 yen after
touching 110.420, its weakest since Nov. 22.
The euro was 0.45 percent higher at $1.0847 following
a rise to $1.0849, its strongest early December.
Traders said the market was divided on what the failure of
Trump's healthcare bill meant for the outlook for U.S. tax cuts
and infrastructure spending.
"There is a widespread perception that failure to pass the
healthcare bill somehow derails the rest of the Trump agenda,"
said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
"We think linking this particularly difficult legislative
undertaking with the rest of the Trump is flawed," he argued.
"It actually presents a scenario where tax reform can
potentially be accelerated."
Others, however, including much of the mainstream press
wondered how Trump would get any major changes through such a
"It clearly highlights that divides remain, and it means
that the policy paralysis that was often evident over recent
years could linger," wrote analysts at ANZ in a note.
"With fiscal policy uncertainty rising again the risk is
that business and consumer sentiment reverse recent gains, which
would have growth consequences."
Against the sagging dollar, the pound was up 1.1 percent at
$1.2515, reversing the previous day's losses when the
currency fell as investors braced for Britain beginning the
formal process of leaving the European Union this week.
The Australian dollar was up 0.1 percent at $0.7632
and the New Zealand dollar rose 0.2 percent to $0.7044 <NZD=D4.
(Editing by Lincoln Feast & Shri Navaratnam)