* Trump expected to give details on spending, tax reform
* France election campaign continues to weigh on euro
* Speculators increase dollar bets -IMM data
* Sterling pressured by possibility of Scottish vote
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly and Ritvik Carvalho
LONDON, Feb 27 The dollar edged up from a
2-1/2-week low against the yen on Monday but struggled to gain
traction more broadly, as investors awaited a speech this week
by U.S. President Trump for clues on his economic agenda.
Trump is set make his first major policy address to the U.S.
Congress on Tuesday, and is expected to give some details on his
planned infrastructure spending and tax reform.
But market participants say if the plans laid out are too
vague or look slow to execute that could weigh on a dollar that
reached 14-year highs earlier this year on the back of the
"Trumpflation trade" - a view that Trump's policies would boost
inflation and growth.
"The FX market is going to be most reactive to anything in
the address which seems to reverse what we were already thinking
was in train," said Stephen Gallo, currency strategist at BMO
Capital Markets in London, highlighting corporate tax reform,
fiscal stimulus and a rollback of regulation as the policies
investors had bet on.
"Anything that shrinks from that would probably cause a
decent reaction in the dollar negatively."
Treasury Secretary Steven Mnuchin said on Sunday that Trump
will use the event to preview some elements of his sweeping
plans to cut taxes for the middle class, simplify the tax system
and make U.S. companies more globally competitive, with lower
rates and changes to encourage U.S. manufacturing.
Having hit a low of 111.92 yen in early trading in
Asia, the dollar was up 0.3 percent at 112.29 yen by 1200 GMT.
Against a basket of major currencies it was flat at 101.08
Economic data on Friday put pressure on U.S. bond yields and
the dollar, showing new home sales grew less than expected in
January and consumer sentiment weakening.
But speculators have not counted the dollar out, increasing
bullish bets on it for the first time in seven weeks, according
to Commodity Futures Trading Commission data released on Friday
and calculations by Reuters.
The euro edged up just 0.2 percent to $1.0583, as
concerns that far-right anti-EU leader Marine Le Pen could win
France's upcoming presidential election continued to weigh on
the single currency.
Despite another raft of polls showing Le Pen losing either
to centrist Emmanuel Macron or the conservative Francois Fillon,
investors, mindful of the shocks of Brexit and Trump, have not
counted her out, and many fear that she could lead France out of
the euro zone.
"The changes in the polls perhaps won't be listened to,
because people just don't trust them," said Rabobank currency
strategist Jane Foley.
Sterling skidded to a twelve-day low of $1.2384 on a report
that Scotland was preparing to call another independence
referendum when formal Brexit negotiations are triggered in
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Robin Pomeroy)