* Dollar index pulls away from 4-1/2-month lows
* Fed speakers remind markets of rate hike plans
* Sterling dips as Britain formally launches Brexit
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, March 29 The dollar pulled away from
4-1/2-month lows on Wednesday after solid data backed
expectations for more U.S. interest rate hikes this year, while
sterling dipped as Britain moved to launch its exit from the
The dollar index, which tracks the greenback against six
major rival currencies, rose to 99.854, up 0.2 percent.
It managed to crawl off a low of 98.858 hit earlier this week,
its weakest level since Nov. 11, in the wake of U.S. President
Donald Trump's failed healthcare bill.
Data on Tuesday showed the U.S. consumer confidence index at
its highest level since December 2000, pushing up U.S. Treasury
yields and providing support for the greenback.
City Index research director Kathleen Brooks, in London,
said the dollar's strength was down to a mixture of Fed
expectations, the stronger U.S. data, and hopes that Trump would
now focus on tax reform.
"The continuing strength of the U.S. economic data is
obviously a key driver," said Brooks. "We're also seeing the
positive correlation between the stock market and the dollar
reinstated. So as the stock market recovers, that's obviously
good news for the dollar as well."
"By and large the market is giving Trump a second chance,
and we think there's a Trump premium in the market," she added.
Trump's healthcare reform defeat at the end of last week
raised doubts about his ability to carry out his fiscal stimulus
and tax cuts, and pushed the dollar to 110.11 yen on
Monday, its lowest since Nov. 18.
It has since recovered almost 1 percent but was still lower
0.2 percent at 110.96 yen on Wednesday.
"(The dollar's strength) is probably more a function of the
very strong U.S. consumer confidence numbers we saw yesterday
and the somewhat more hawkish noises we've seen emanating from
the Fed," said Alvin Tan, currency strategist at Societe
Generale in London.
U.S. Federal Reserve Vice Chairman Stanley Fischer said in a
television interview on Tuesday that two more increases to U.S.
overnight interest rates this year seemed "about right".
The Fed raised rates in March, and a majority of the central
bank's policymakers foresee at least two more increases this
But Fed Governor Jerome Powell said on Tuesday that the
collapse of the healthcare bill had made the U.S. central bank's
job harder as it tried to anticipate which set of policies would
Sterling steadied at $1.2452 as investors focused on
Britain's formal request to leave the European Union.
The euro was down 0.2 percent on the day at $1.0792.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(additional reporting by Tokyo markets team; Editing by Jermey