* Loonie, Mexican peso bounce as Trump says won’t scrap NAFTA
* US tax plan offers no surprises, dollar/yen slips off 4-wk high
* ECB awaited after 1st round of French votes, Riksbank also eyed
* BOJ stands pat on policy as expected, little impact on yen (Updates prices, adds details and quotes)
By Shinichi Saoshiro
TOKYO, April 27 (Reuters) - The dollar held gains against the yen on Thursday after U.S. President Donald Trump’s tax plan offered no fresh surprises, slowing the greenback’s rally, while the market awaited the European Central Bank’s upcoming monetary policy decision.
The Canadian dollar and Mexican peso, which had slumped earlier on reports the United States is considering withdrawing from the North American Free Trade Agreement (NAFTA), bounced sharply after Trump said he would not scrap the pact but renegotiate instead.
Against the Japanese yen, the dollar had surged to a four-week high of 111.780 overnight before the unveiling of Trump’s tax reform plan, but it lost traction as it failed to excite investors. The dollar was last up 0.15 percent at 111.220 yen.
The yen showed little reaction to the Bank of Japan’s decision on Thursday to keep monetary policy steady as the outcome was well anticipated.
Trump’s plan would cut the income tax rate paid by public corporations to 15 percent from 35 percent and reduce the top tax rate assessed on pass-through businesses, including small partnerships and sole proprietorships, to 15 percent from 39.6 percent.
“The Trump tax plan did not go beyond what the media had been reporting all week. And while the plan appears ambitious, its foundations are shaky from a revenue perspective,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
“Participants have become wary of pushing the dollar further under such conditions.”
The euro was up 0.1 percent at $1.0913.
The euro has had a buoyant week, climbing to a 5-1/2 month high of $1.0951 on Wednesday, as the first round of the French presidential elections held over the weekend reduced perceived risk towards the common currency.
The single currency has also soared against the safe-haven yen, which has broadly retreated this week as risk aversion has ebbed on the back of the French election results. The euro was at 121.445 yen after climbing overnight to a five-week peak of 121.980.
Another factor spurring gains for the euro this week has been expectations of a change in the direction of ECB policy in coming months, that it would soon scale back monetary stimulus.
The central bank is due to announce its policy decision later on Thursday and the focus is on whether the recent French election results, which favour a pro-euro centrist, had any impact in the ECB’s stance.
“The euro has been gaining against the dollar and yen amid expectations of the ECB signalling policy tapering. So it could go temporarily on the defensive if the central bank does not deliver any tapering signals,” said Shusuke Yamada, a senior strategist at Bank of America Merrill Lynch in Tokyo.
Sweden’s central bank also makes a rates decision on Thursday, and while the Riksbank is widely expected to stand pat, investors will be looking for any hawkish signals after recent signs of strength in the domestic economy.
The Canadian dollar bounced 0.6 percent to C$1.3542 per dollar. The loonie had initially weakened to a 14-month low of C$1.3636 after a senior administration official said on Wednesday that Trump is considering issuing an executive order to pull the United States from NAFTA.
The Mexican currency strengthened 1.2 percent to 18.95 pesos per dollar after sinking to a more than one-month low of 19.29 overnight.
Antipodean currencies also rose as Trump’s latest stance on NAFTA eased concerns towards U.S. trade protectionism for now.
The Australian dollar was a shade higher at $0.7489 after retreating to a three-month low of $0.7455 the previous day on lacklustre local inflation data. The New Zealand dollar added 0.4 percent to $0.6920, pulling back from a four-month low of $0.6873 plumbed overnight.
The dollar index against a basket of major currencies slipped 0.2 percent to 98.844 after rising to 99.332 the previous day. (Editing by Jacqueline Wong)