By Kevin Kingsbury and Kenan Machado
Asian shares were broadly lower Tuesday, as the dollar fell to fresh postelection lows after Senate Republicans gave up their efforts to replace Obamacare.
The Wall Street Journal Dollar Index, which hit its lowest level since October on Friday, was recently down 0.4%. The euro topped $1.15 for the first time since May 2016.
If Republicans can't pass a replacement health-care bill, "there is little else [they] could do" with passing other legislation, said Toshihiko Sakai, senior manager of forex and financial-products trading at Mitsubishi UFJ Trust and Banking.
The dollar surged after President Donald Trump's election win, driving stocks in much of the world higher. But that investor enthusiasm has waned in currency and fixed-income markets this year, even as stocks have continued to power ahead, hitting record highs around the world.
The health-care failure raises the prospect that Mr. Trump's proposed infrastructure spending gets delayed further, said Sue Trinh, head of forex strategy for Asia at Royal Bank of Canada.
The weakness in the U.S. dollar weighed on stocks particularly in Australia and Japan.
The Australian dollar jumped 1.1% to its highest level versus the greenback in two years, getting an additional boost from the release of minutes from this month's central-bank meeting. During the gathering, Australian officials discussed the effects of a neutral interest-rate policy.
J.P. Morgan economist Sally Auld cautioned investors shouldn't make too much of the talk. She said that if central-bank officials were briefed on new work by staff regarding where interest rates should be when central bank policy is neither accommodative nor tight, it is a matter of procedure that the discussion be noted in the minutes.
Several analysts also don't expect a rate increase to come soon.
"The RBA is clearly still wary of downside risks to consumption growth stemming from high household-debt levels," said Fiona Lim, a forex analyst at Maybank in Singapore.
Australia's S&P/ASX 200 fell 0.9% with the country's big banks, which are heavily weighted in the index, sliding nearly 2%.
Meanwhile, weakness in the dollar--both today and from Friday after weak U.S. economic data--filtered through Japanese stocks after Monday's holiday. The Nikkei was down 0.5% Tuesday afternoon after earlier falling back below 20000. The dollar declined from Yen112.60 early Tuesday in Asia to briefly breach Yen112; it was recently around Yen112.05.
Sovereign-debt yields have also fallen the past several sessions, and that weighed on Japanese insurers Tuesday. Dai-ichi Life and T&D Holdings both slid nearly 3%.
Elsewhere, Chinese stocks fell further after showing early resilience following Monday's slump. The Shenzhen Composite finished morning trading down 0.7%, while the Shanghai Composite declined 0.6%.
India's Sensex index shed 0.6% after notching its latest record closing high on Monday. But benchmarks in South Korea and New Zealand, which also reached new peaks on Monday, held on to their gains Tuesday. The NZX 50 closed up 0.1% at another record high.
Kosaku Narioka contributed to this article.
Write to Kevin Kingsbury at [email protected] and Kenan Machado at [email protected]