* Euro retreats from 5-1/2 month high, yen steadies
* Eyes on Trump announcement on tax
* Commodity currencies continue to struggle
* Aussie, kiwi big losers after Australian inflation data
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, April 26 The euro retreated from
5-1/2 month highs against the dollar on Wednesday, investors
cashing in gains made on the back of the first round of France's
presidential elections and a market rethink on euro zone
Attention was also turning to U.S. President Donald Trump's
promised announcement on tax cuts, supporting a reheating of the
dollar-positive "Trumpflation" trades that dominated the end of
last year but have waned since.
The yen - a sufferer this week from buoyant sentiment on
stock markets since the French vote on Sunday - was steadier
while Australia's and New Zealand's dollars both fell more than
half a percent after soft Australian inflation numbers.
By 1110 GMT, the euro had fallen around a third of a percent
against both the dollar and the yen, weakening to $1.0886 from a
high of $1.0951 hit in early European trade.
"There has been nothing specific driving the move this
morning, we just got up to the $1.0950 area and that did seem
like an obvious place to take profit," said the head of currency
trading with one large international bank in London, asking not
to be named.
"There is also the question today of course of whether Trump
will decide to do something on the tax front and how that will
be taken, especially if it leaves a big gap in revenue."
Traders said the Aussie, kiwi and Canadian dollars - all of
which normally gain when investors are feeling good about global
growth prospects - were also still suffering from the softness
in prices of a number of major commodities since February.
Gains for the euro this week have also been spurred by
expectations of a change in the direction of European Central
Bank policy in coming months.
But Wednesday's data, by contrast, pointed to an Australian
economy still under strain from mediocre growth in China and
unlikely to support higher interest rates over the next year.
"This report was the straw that broke the camel’s back as
investors have been betting heavily on a pick-up in inflation
that would have forced the Reserve Bank of Australia to revise
its dovish stance," said Arnaud Masset, an analyst with broker
"We believe that the U.S. dollar debasement is coming to an
end and the Aussie is the first in line for the sell-off."
The Aussie fell as much as 0.6 percent to $0.7490 in morning
trade in Europe, its lowest since April 12. The kiwi lost
0.7 percent to $0.6902.
U.S. officials said late on Tuesday that Trump was proposing
to slash the corporate income tax rate and offer multinational
businesses a steep tax break on overseas profits brought into
the United States.
"Just presenting the plan doesn't mean the plan is going to
be passed," said Mitul Kotecha, head of Asia macro strategy for
"The reality is any tax changes or tax reforms or tax cuts
may not take place for some time, and Congress at this point is
far from being agreed on what shape or form they are going to
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 Masayuki Kitano in TOKYO; editing by