* Dollar hit as Trump suffers a big political setback
* Dollar index slides to near 2-mth low
* Dollar/yen hits 4-mth low, euro strongest since early Dec
(Updates prices, adds quotes)
By Shinichi Saoshiro and Wayne Cole
TOKYO/SYDNEY, March 27 The dollar slid to a near
two-month low against a basket of currencies on Monday as
concerns mounted about the chances of U.S. fiscal stimulus after
President Donald Trump's failure to push through a healthcare
Trump's inability to deliver on a major election campaign
promise marked a big setback for a Republican president whose
own party controls Congress, and raised doubts whether he will
be able to push through tax reforms and mega-spending packages.
"Concerns towards the Trump administration have been
reignited after his healthcare legislation setback. This is
resulting in a bout of risk aversion weighing on the dollar,"
said Shin Kadota, senior strategist at Barclays in Tokyo.
"There isn't much going for the dollar right now and the
market will be bracing for its further decline."
Dragged down by declining U.S. yields, the dollar index
against a basket of major currencies was down 0.4 percent at
99.258, its lowest since Feb. 2.
The index had risen to a 14-year high near 104.00 early in
January when expectations for significant stimulus under the
Trump presidency were at their peak.
U.S. equity index futures fell to a six-week low, in a sign
of stress for Wall Street stocks which had ascended record peaks
at the start of the month.
"Speculators are likely to close out their yen-selling
positions and buy back the currency if U.S. stocks and yields
continue adjusting lower and hurt risk sentiment," said Koji
Fukaya, president at FPG Securities in Tokyo.
Against the safe-haven yen, the dollar fell more than one
percent to 110.260, its weakest since Nov. 22. It last traded at
Earlier in the session, the euro touched $1.0850, its
highest since Dec. 8, and it was hovering near that level by the
afternoon in Asia.
Some analysts were less pessimistic about Trump's chances of
success pursuing his economic agenda.
"There is a widespread perception that failure to pass the
healthcare bill somehow derails the rest of the Trump agenda,"
said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
"We think linking this particularly difficult legislative
undertaking with the rest of the Trump is flawed," he argued.
"It actually presents a scenario where tax reform can
potentially be accelerated."
Others, however, including much of the mainstream press
wondered how Trump would get any major changes through such a
"It clearly highlights that divides remain, and it means
that the policy paralysis that was often evident over recent
years could linger," wrote analysts at ANZ in a note.
"With fiscal policy uncertainty rising again, the risk is
that business and consumer sentiment reverse recent gains, which
would have growth consequences."
Against the sagging dollar, the pound was up 1.2 percent at
$1.2527, reversing the previous day's losses when the
currency fell as investors braced for Britain beginning the
formal process of leaving the European Union this week.
The Australian dollar was steady at $0.7629 and the
New Zealand dollar rose 0.2 percent to $0.7046 <NZD=D4.
(Editing by Simon Cameron-Moore)