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US dollar hit after healthcare bill collapse; euro rallies 0.9%

The US dollar was hit on Tuesday after the collapse of a Republican healthcare bill in the Senate added to policy angst, with the euro posting particularly vigorous gains on the buck.

The dollar index, a measure of the currency against half-a-dozen trading partners, dropped 0.64 per cent, hitting its lowest level on a fix basis since last August, according to Bloomberg data. The euro was firmly in rally mode, up 0.86 per cent to $1.1577; the common currency also advanced 1.1 per cent on the pound.

Meanwhile, the buck dropped 0.58 per cent against the Japanese Yen to Y111.97. The pound was a rare loser among developed-market currencies, slipping 0.25 per cent to $1.3022.

The dollar weakness came amid “fading hopes of healthcare reform,” said Chris Turner, a currencies strategist at ING. Goldman Sachs analysts added that the failure of the latest Republican bill to repeal and replace the Affordable Care Act means that it looks “increasingly difficult” for the effort to be revived.

The debate in Congress is important to currencies traders because it is seen as something of a litmus test of Republican leadership’s ability to corral dueling factions within the GOP.