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FOREX-Dollar bounces on Fed talk, sterling wobbles on Brexit anxiety

Published 29/03/2017, 11:56 am
Updated 29/03/2017, 12:00 pm
FOREX-Dollar bounces on Fed talk, sterling wobbles on Brexit anxiety

* Dollar index pulls away from 4-1/2-month lows

* Fed speakers remind markets of rate hike plans

* Sterling braces for formal filing of Brexit launch

TOKYO, March 29 (Reuters) - The dollar pulled away from 4-1/2-month lows against a currency basket on Wednesday as solid data backed expectations for more U.S. interest rate hikes this year, while sterling was knocked by concern about Britain's impending exit from the European Union.

The dollar index, which tracks the greenback against six major rival currencies, edged up 0.1 percent to 99.754 .DXY , It moved off a low of 98.858 plumbed earlier this week, its weakest level since Nov. 11, in the wake of U.S. President Donald Trump's failed healthcare reform bill.

The healthcare stumble raised doubts that Trump would be able to carry out his fiscal stimulus and tax cuts, and pressured the dollar to 110.11 yen JPY= , its lowest since Nov. 18. It last stood at 111.17 yen, up slightly on the day.

"I think the optimism about 'Trumponomics,' against the failure to pass the Obamacare reform bill, is still dominating the dollar/yen market," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

"The dollar has been quite resilient, and this shows that optimism and hope among market participants remains, that some things will happen under the Trump administration," Yamamoto said.

U.S. Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to U.S. overnight interest rates this year seemed "about right." Fed raised rates in March, and a majority of the central bank's policymakers foresee at least two more increases this year.

Fed Governor Jerome Powell said on Tuesday that the collapse of the healthcare overhaul efforts had made the U.S. central bank's job harder as it tries to anticipate which set of policies would pass. rate hike expectations, the Conference Board said the U.S. consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114 and much higher than 116.1 in February. The March level marked the highest since December 2000. wallowed at one-week lows, down 0.4 percent at $1.2403 GBP= as investors braced for British Prime Minister Theresa May's move later on Wednesday to formally file paperwork to leave the European Union.

Investors were also assessing news that Scotland's parliament had backed a vote for independence but that the British government would not enter independence negotiations. weighing on the pound, Bank of England interest rate-setter Ian McCafferty highlighted a weak outlook for the economy on Tuesday, and said he did not know if he would vote to increase borrowing costs at the next BoE meeting in May. euro was steady on the day at $1.0814 EUR= .

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