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NEW YORK (Reuters) - The U.S. dollar hit a four-month low against the safe-haven yen on Wednesday as investors rethought growth expectations under a Trump administration that had pushed the greenback to a 14-year peak and stocks to record highs.
The dollar, which had slipped after last week's less hawkish Federal Reserve monetary policy statement, took a turn for the worse this week amid growing doubt about the potential pace of U.S. interest rate increases.
On Wednesday, the dollar index .DXY, which measures the greenback against a basket of six major currencies, was down 0.12 percent at 99.698 after touching a near seven-week low of 99.547.
"We are seeing a bit of a de-risking happening across markets right now, given the jitters around the idea that (President Donald) Trump will fail to enact a number of his pro-business policies," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
Against the yen, which investors traditionally flock to during times of risk aversion, the dollar fell as much as 0.86 percent to a four-month low of 110.75 yen JPY=, with nervousness deepening ahead of a key healthcare vote in the U.S. Congress on Thursday.
"There is certainly a bit more bullishness in the yen over the last two weeks and we are seeing that continue," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.
For risk markets to look better by the end of this week, the healthcare bill would need to pass and there would need to be signs of improving U.S. business sentiment when the durable goods orders report comes out on Friday, Morgan Stanley strategists led by Hans Redeker wrote in a note.
Sterling GBP=D4 fell to the day's low of $1.2424 before recovering ground to trade little changed against the dollar, after four people were killed and at least 20 injured in London when a car ploughed into pedestrians and an attacker stabbed a policeman close to the British parliament.
The attack in also added to nerves and sent at least a few investors towards safe havens, Schamotta said.
Reporting by Saqib Iqbal Ahmed; Editing by Chris Reese and James Dalgleish