* Dollar index pulls away from 4-1/2-month lows
* Fed speakers remind markets of rate hike plans
* Sterling braces for formal filing of Brexit launch
TOKYO, March 29 The dollar pulled away from
4-1/2-month lows against a currency basket on Wednesday after
solid data backed expectations for more U.S. interest rate hikes
this year, while sterling was knocked by Britain triggering its
exit from the European Union.
The dollar index, which tracks the greenback against six
major rival currencies, edged up slightly to 99.751. It
managed to crawl off a low of 98.858 plumbed earlier this week,
its weakest level since Nov. 11, in the wake of U.S. President
Donald Trump's failed healthcare reform bill.
"The 'Trump trade' is still alive after all. It was too
early to declare it dead with the failure of the healthcare
reform bill to pass," said Ayako Sera, senior market economist
at Sumitomo Mitsui Trust.
"As long as the U.S. economy shows signs of strength, the
dollar will remain strong, but since an overly strong dollar
also has some downside for the U.S. economy, there will be
dollar corrections," she said.
The healthcare failure reform raised doubts that Trump would
be able to carry out his fiscal stimulus and tax cuts, and
pressured the dollar to 110.11 yen, its lowest since Nov.
18. It last stood at 111.22 yen, up slightly on the day.
"I think the optimism about 'Trumponomics,' against the
failure to pass the Obamacare reform bill, is still dominating
the dollar/yen market," said Masafumi Yamamoto, chief forex
strategist at Mizuho Securities in Tokyo.
"The dollar has been quite resilient, and this shows that
optimism and hope among market participants remains, that some
things will happen under the Trump administration," Yamamoto
U.S. Federal Reserve Vice Chairman Stanley Fischer also gave
the dollar a lift as he said in a television interview that two
more increases to U.S. overnight interest rates this year seemed
The Fed raised rates in March, and a majority of the central
bank's policymakers foresee at least two more increases this
Fed Governor Jerome Powell said on Tuesday that the collapse
of the healthcare reform bill had made the U.S. central bank's
job harder as it tried to anticipate which set of policies would
Reinforcing rate hike expectations, the Conference Board
said U.S. consumer confidence index hit 125.6 in March,
surpassing expectations for a reading of 114, and much higher
than 116.1 in February. The March level marked the highest since
The data pushed up U.S. Treasury yields, further bolstering
the dollar's appeal. The yield on benchmark 10-year notes
rose to 2.421 percent in Asian trading, from its
U.S. close of 2.409 percent on Tuesday.
Sterling, meanwhile, wallowed at one-week lows, down 0.3
percent at $1.2412 as investors braced for British Prime
Minister Theresa May's move later on Wednesday to formally file
paperwork to leave the European Union.
Investors were also assessing news that Scotland's
parliament had backed a vote for independence even though the
British government said it would not enter independence
negotiations with Scotland.
Further weighing on the pound, Bank of England interest
rate-setter Ian McCafferty highlighted a weak outlook for the
economy on Tuesday, and said he did not know if he would vote to
increase borrowing costs at the next BoE meeting in May.
The euro was steady on the day at $1.0813.
(Reporting by Tokyo markets team; Editing by Shri Navaratnam
and Eric Meijer)