Investing.com - The dollar dropped to four-month lows against a basket of the other major currencies on Monday as the failure of U.S. Republicans to get enough support for their own bill to overhaul healthcare rattled investors.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.7% at 98.88, its lowest trough since November 11.
The index had surged to almost 14-year highs in early January propelled higher by expectations for a strong economic recovery and higher inflation, the so called ‘Trump Trade’.
A planned vote on legislation to repeal and replace the Affordable Care Act was pulled on Friday night after it became apparent that it didn’t have enough support from Republicans.
The failure of the Trump administration to push through legislation to replace Obamacare renewed doubts over Trump’s ability to deliver on the rest of his pro-growth economic agenda, such as corporate tax cuts, regulatory reform and infrastructure spending.
The dollar fell more than 1% against the traditional safe haven yen, with USD/JPY dropping 1.08% to 110.15, the lowest level since November 18.
The euro advanced to its highest levels since early December, with EUR/USD climbing 0.62% to 1.0864.
Sterling was also higher against the weaker dollar, with GBP/USD rising 0.74% to 1.2565.
The selloff in the dollar overshadowed concerns about Britain beginning the formal process of leaving the European Union later in the week.
Meanwhile, the Australian dollar was slightly higher, with AUD/USD up 0.13% to 0.7634, while the New Zealand dollar pushed higher, with NZD/USD rising 0.43% to 0.7056.