* Dollar index wallows not far from 4-1/2-month lows
* Greenback still seen vulnerable with "Trump trade" fading
* Sterling braces for May's formal "Brexit" trigger
By Lisa Twaronite and Shinichi Saoshiro
TOKYO, March 28 The dollar limped off
multi-month lows against major peers on Tuesday, with much of
the lift from the "Trump trade" now gone.
The greenback had taken a beating as market participants saw
the prospects for a U.S. fiscal spending boost from President
Donald Trump significantly diminished by his failure to pass a
key healthcare reform bill.
"Clearly, the dollar is reacting to concerns that President
Trump might not be able to push through his legislative agenda,
given the fact that they've ditched, at least for now,
healthcare reform," said Mitul Kotecha, head of FX and rates
strategy for Barclays in Singapore.
"There are doubts about whether he can pass his stimulus,
and therefore about the bullishness on U.S. growth that we were
seeing just a few weeks ago," he said. "It's not surprising that
the dollar is reacting in this way."
The dollar index against a basket of major currencies edged
up 0.1 percent to 99.212, after plumbing a trough of
98.858 overnight, its lowest level since Nov. 11.
The index had risen to a 14-year high near 104.00 in early
January when expectations for inflation-boosting U.S. stimulus
under the Trump presidency were at their peak.
The dollar slipped 0.1 percent to 110.605 yen
following its slide to 110.110 overnight, its lowest since Nov.
The dollar remains biased towards the downside on receding
hopes that the Trump administration will be able to deliver on
tax reform and infrastructure spending, said Masafumi Yamamoto,
chief forex strategist at Mizuho Securities in Tokyo.
"But a one-way drop by the dollar is also unlikely as the
Republicans cannot face midterm elections in November of next
year without enacting a single fiscal stimulus step," he said.
The euro was a shade higher at $1.0865, after
scaling$1.0906 in the previous session, its loftiest peak since
The common currency got a lift from news that German
Chancellor Angela Merkel's conservatives won a regional election
in the western state of Saarland on Sunday, dealing a setback to
their Social Democrat rivals and boosting Merkel's prospects of
winning a fourth term in September's national election.
The pound added 0.1 percent to $1.2568 after
surging almost one percent to $1.2615 overnight, its highest
since Feb. 2.
On Wednesday, British Prime Minister Theresa May will
formally notify the European Union of Britain's intention to
leave it, triggering Article 50 of the Lisbon Treaty and
launching two years of unprecedented negotiations.
Some major banks have predicted the pound will fall below
$1.20 in the negotiation period. Britain appears to have set its
course for a "hard Brexit", where a clean break is favoured to
regain control over issues such as immigration.
The Australian was slightly higher on the day at $0.7620
while the New Zealand dollar was slightly lower at
(Reporting by Shinichi Saoshiro and Lisa Twaronite; Editing by