* Dollar drifts in tight range against yen, euro
* Aussie slips after weaker-than-expected Q4 capex data
* Eyes still on French politics as poll shows Le Pen gains
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Feb 23 The dollar retreated almost half
a percent against the yen on Thursday, weighed down by the lack
of progress towards a near-term rise in interest rates or tax
reforms and public spending that investors hope will reflate the
In European and Asian sessions dominated by trade in tight
ranges, the euro was holding around half a cent above
lows hit on Wednesday as another round of French presidential
polls showed gains for far-right candidate Marine Le Pen.
Concerns over the shape of politics on both sides of the
Atlantic has helped the yen in recent sessions as some investors
sought traditional safe havens for capital. It rose 0.4 percent
to 112.82 yen per dollar by 1300 GMT.
New U.S. Treasury Secretary Steven Mnuchin said that any
steps the administration took were unlikely to have any effect
this year and that it planned to deliver a much expected tax
overhaul by August.
That was in line with comments by other politicians over the
past month, but seemed to some investors to dial back President
Trump's own recent promises.
"While it remains very difficult to pin down a fixed
schedule for Trump tax reforms, it now appears anything
phenomenal will now be delayed," said Adam Myers, a currency
strategist with Commonwealth Bank in London.
"Such policy drag should - at some stage - open up stock
markets to disappointment and limit dollar strength."
The political nerves that have affected trade in the euro in
the past week were still in evidence, driving two-month implied
volatility of the currency to the highest in a month as
contracts took in the first French election round in April.
But the three-month equivalent was down slightly from
post-Brexit vote highs hit on Wednesday, bolstering spot prices
for the euro.
A poll showing Le Pen was only 10 points behind conservative
Francois Fillon but 22 points behind centrist Emmanuel Macron in
the potential second-round run-offs was not enough to knock the
single currency backwards.
"What we have seen later yesterday and this morning is some
euro strength," said Karl Steiner, a strategist with SEB in
"It will be interesting to see if the euro continues to be
dominated by French politics. That has certainly been the case
in the last few days."
By 1300 GMT, the euro was up 0.21 percent on the day at
$1.0570, up half a cent on lows hit in the European
morning on Wednesday.
The dollar index, which measures its broader strength
against a basket of other currencies, inched lower on the day to
101.13. That compared to a one-month high of 101.76 hit
The big set piece overnight was U.S. Federal Reserve
minutes, which while not as hawkish as some in the market had
hoped, just about kept a March interest rate hike in play.
The Fed rarely delivers interest rate moves that are not
largely priced in by money markets and Fed funds futures show
the chances of a rise next month are still only around 20-25
percent. Any move in those expectations can be expected to push
the dollar higher after a listless few weeks.
Mnuchin also told the Wall Street Journal that the strong
dollar was "a good thing" in the long run, in contrast to a
number of comments by officials in Trump's administration that
have weighed on the currency in the past month.
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 Catherine Evans)