Dollar steadies after U.S. healthcare bill pulled

By Saqib Iqbal Ahmed

NEW YORK (Reuters) - The dollar pulled back from near a four-month low against the Japanese yen on Friday, and was on pace to snap an eight-day losing streak against the safe-haven currency, after Republicans killed their bill to overhaul the U.S. healthcare system.

Republican leaders of the U.S. House of Representatives pulled legislation to overhaul the U.S. healthcare system from consideration on Friday due to a shortage of votes despite desperate lobbying by the White House and its allies in Congress, dealing a stiff setback to President Donald Trump.

With a risk-averse mood across markets, the greenback has slipped about 1.3 percent against the yen this week <=JPY>. On Friday, it was up 0.31 percent at 111.27 yen.

"The last few days, the market has sort of traded on the back foot on anticipation of the vote that would happen at some point this week," Mazen Issa, senior FX strategist at TD Securities in New York. "Generally, risk sentiment had been undermined off of that."

"Maybe just lifting the uncertainty premium has markets breathing a sigh of relief for now," Issa said.

The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, was down 0.02 percent at 99.739, after falling to a seven-week low of 99.527, earlier in the session.

Investors have been split on whether a defeat for the bill would knock the dollar and stock markets - because it would suggest Trump's inability to get reforms through Congress, or whether it would boost them - as he would then be able to move straight onto tax reforms.

"If this stronger dollar has legs, it depends on the next step. If there is a pivot to taxes from healthcare, the market has to see the plan,” Paresh Upadhyaya, director of currency strategy, Pioneer Investments, in Boston.

The euro gained 0.19 percent, at $1.0800 , close to a seven-week peak of $1.0825 touched on Wednesday on the view that the European Central Bank is heading toward tightening monetary policy as growth and inflation accelerates across the euro zone.

Sterling fell against the dollar and euro from the previous session's one-month highs, as investors braced for Britain to begin next week the formal process of leaving the European Union.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Richard Leong; Editing by Richard Chang and Lisa Shumaker)

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