Dollar nurses losses as healthcare bill flounders

By Lisa Twaronite

TOKYO (Reuters) - The dollar nursed losses on Wednesday after skidding to a 10-month low against a currency basket as the Republican failure to pushed through a stalled U.S. healthcare bill raised fears about the rest of President Donald's Trump reform agenda.

Republican efforts to overhaul or repeal Obamacare collapsed in the U.S. Senate on Tuesday, rattling financial markets and casting doubt on the chances of getting Trump's economic plans, such as tax reform and stimulus, through a divided Congress.

The dollar index, which tracks the greenback against a basket of six major rivals, edged up 0.1 percent to 94.694 after falling as low as 94.476 on Tuesday, its lowest level since September 2016.

The euro was steady on the day at $1.1549 , after rising as high as $1.1583 on Tuesday, its highest since May 2016.

Expectations that the Federal Reserve will be more cautious about raising interest rates also weighed on the greenback.

Economic data on Tuesday showed U.S. import prices falling for a second straight month in June as the cost of petroleum products declined further, suggesting inflation pressures could remain benign for a while.

Fed Chair Janet Yellen signalled caution last week in her congressional testimony, and disappointing U.S. inflation and retail sales data on Friday added to evidence that the central bank has reason to take its time in tightening.

"The failure of the healthcare bill added the newest pressure to the dollar, but it was already under pressure after Yellen's comments last week," said Mitsuo Imaizumi, Tokyo-based chief foreign exchange strategist for Daiwa Securities.

The Fed chief referred to "uncertainty," he said, a word that "makes markets nervous," and prompted them to pare their expectations of another interest rate hike this year, he said.

The dollar slipped 0.1 percent on the day to 111.950 yen , well below its nearly four-month high of 114.495 touched last week. It fell as low as 111.685 on Tuesday, its lowest since June 27.

The Bank of Japan will conclude a policy meeting on Thursday.

Policymakers are expected to raise their economic growth forecasts but cut their rosy inflation outlook next week, sources say, reinforcing expectations it will lag well behind major global central banks in dialling back its massive stimulus programme.

A majority of economists polled by Reuters expect the BOJ to delay again its projected timing for achieving the 2 percent inflation target.

The Australian dollar was up 0.1 percent at $0.7918 after surged 1.5 percent to two-year highs on Tuesday as minutes of the last meeting of the country's central bank showed policymakers turned more upbeat on the economic outlook.

(Reporting by Lisa Twaronite; Editing by Kim Coghill)