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Hong Kong - The dollar sank with most Asian equities on Tuesday as two Republican senators rejected their party's bill repealing Obamacare, effectively killing it and throwing Donald Trump's economic agenda into doubt.
Global markets soared for months after Trump's November election on hopes his big-spending, tax-cutting policies would fire the world's top economy.
But an ongoing crisis surrounding the White House has hobbled the tycoon's presidency, with opposition to his controversial health care reforms - crucial to freeing up cash - raising questions about his ability to push other big-ticket measures.
While Republicans have 52 of the Senate's 100 seats, the opposition to the bill from two members last week was followed on Monday by two more. Their decision means the bill has no chance of even getting a vote unless Senate Majority Leader Mitch McConnell makes significant changes to woo sceptics.
Stephen Innes, senior trader at OANDA, said in a commentary: "This headline has massive implications to amend Obamacare and brings a huge element of doubt over the tax reform.
"Equity futures are wobbling, the dollar is selling off. Gold has picked up its allure again given the heightened political risk landscape."
Tokyo's Nikkei ended the morning session 0.6% lower, with the yen strengthening against the dollar, dragging on Japanese exporters. The market was closed for a holiday Monday.
Eyes on Draghi
Shanghai shed 0.1%, Sydney fell 1% while Seoul and Singapore were each 0.1% off.
Wellington, Taipei and Jakarta all slipped.
However, Hong Kong extended gains into a seventh day, rising 0.2% to sit at a two-year high.
On currency markets the dollar came under pressure as investors think twice about the chances of the Federal Reserve lifting interest rates again as Trump struggles and inflation remains subdued.
Recent remarks from Fed boss Janet Yellen indicating the bank will concentrate on prices have tempered rate expectations in recent weeks.
Among the biggest winners was the euro, which broke above the $1.15 mark for the first time since last June, with eyes on the European Central Bank's policy meeting later on Thursday.
While ECB chief Mario Draghi is not expected to announce any tightening measures yet, there is speculation it will begin winding in its stimulus programme as the eurozone economy improves.
"The current market discussion suggests September ECB for even (central bankers' US gathering at) Jackson Hole will be the platform (to) announce the ... easing," Innes added.
"The market believes there is no coincidence in Draghi's appearance at Jackson Hole," he added.
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