(Updates prices, adds UK sales data and reaction)
* Obamacare replacement vote key test for Trump in Congress
* Defeat liable to undermine Trumpflation trade further
* Aussie sinks on China worries, iron ore price fall
* Sterling helped by retail sales numbers
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, March 23 The dollar held under $1.08 per
euro for a second day on Thursday ahead of a vote on Republican
healthcare plans seen as a litmus test of President Donald
Trump's ability to legislate in Congress and deliver on tax and
With several major currency pairs steadying after a week of
losses for the dollar, the biggest mover was Australia's dollar
, down half a percent on the back of nerves in China's
money market and a slump in prices for its iron ore exports.
Morning trade in Europe was dominated by a much higher than
expected rise in UK retail sales following three months of
falls, which bolstered speculation of a rise in Bank of England
interest rates this year and prodded sterling higher.
After losing 3.5 percent in the past 10 days, the dollar was
roughly steady at 111.05 yen. It gained 0.1 percent to $1.0786
per euro and was marginally higher against the basket of
currencies used to measure its broader strength.
"We have a holding pattern ahead of the healthcare vote
tonight," said Richard Cochinos, European head of G10 currency
strategy at Citi in London.
"It is a critical vote for how the macro community views the
outlook. If they cannot get this done, then it will be difficult
to adjust the tax overhaul. It puts everything in question and
we may well see the dollar below 110 yen."
The greenback surged higher after Trump's election last year
on expectations of tax changes that would see billions
repatriated to the United States and allow the White House to
spend more, boosting growth, inflation and interest rates.
That faith has evaporated steadily since the turn of the
year and the dollar has fallen against all of its major peers in
With global equities buffeted by a range of concerns this
week, Wall Street on Tuesday suffered its worst day since
The yen has also gained as Tokyo dealt with a political
scandal involving Prime Minister Shinzo Abe, who faces questions
about his ties to a nationalist school involved in a murky land
"If the situation over the prime minister's dealings with
the school remains unresolved, the yen could gain further
against the dollar," said Yukio Ishizuki, senior currency
strategist at Daiwa Securities.
The 1.4 percent monthly rise in UK retail sales in February
eased some of the concerns around softening consumer spending
that have afflicted sterling in the past month.
But its gains were contained at $1.2528, or around 0.3
percent on the day, some measure of the broader worries about
Britain's path out of the European Union which have seen many
major banks forecasting further falls.
"It wasn’t all good news with the January data being revised
lower," said Oanda market analyst Craig Erlam.
"While February was a good month for the consumer, the trend
is both disappointing and concerning. The substantial
depreciation of the pound since the June referendum combined
with rising oil prices is eating away at people’s disposable
income and the cracks are starting to appear."
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
(Additional reporting by Shinichi Saoshiro in TOKYO; Editing by
Tom Heneghan and Richard Lough)