* Concerns about possible North Korean test also underpin
* Dollar pressured as U.S. Treasury yields turn lower
* Euro edges back toward 6-month highs touched after
TOKYO, May 10 The dollar slid on Wednesday and
the perceived safe-haven yen gained after U.S. President Donald
Trump abruptly fired FBI Director James Comey in a move that
shocked Washington and piqued investors' aversion to risk.
Comey had been leading his agency's investigation into
alleged Russian meddling in the 2016 U.S. presidential campaign
and possible collusion with Trump's campaign. Democrats
immediately accused Trump of having political
Any U.S. political uncertainty tends to weigh on the dollar,
as a divided Congress could derail Trump's promised tax reform
and stimulus steps.
The dollar index, which tracks the greenback against a
basket of six major currencies, slipped 0.2 percent to 99.415
, moving away from Tuesday's three-week high of 99.688.
"The Comey news is being treated as a risk-off event, and
the headlines were sparking the dollar's move down," said Bart
Wakabayashi, branch manager for State Street Bank and Trust in
"The 'Trump trade' lifted the dollar after the election, but
now we have to see if he can deliver on all of his promises,"
Lower U.S. yields also pressured the dollar. The benchmark
10-year U.S. Treasury yield slipped to 2.388 percent
in Asian trade, down from Tuesday's U.S. close of 2.407 percent.
It had scaled five-week peaks overnight, as interest rate
futures priced in close to a 90 percent chance that the U.S.
Federal Reserve will raise interest rates again at its next
meeting in June.
The dollar dipped 0.2 percent against its Japanese
counterpart to 113.74 yen, below its overnight high of
114.325, which was its highest since March 15.
Rekindled fears that North Korea could be gearing up for
another weapons test also underpinned the yen.
"In the early morning hours of Asian trade, the yen started
to strengthen, and it could have been the reaction of overseas
markets to a North Korean diplomat's comments," said Mitsuo
Imaizumi, Tokyo-based chief foreign-exchange strategist for
In an interview with Sky News on Tuesday, Pyongyang's
ambassador to the UK, Choe Il, said North Korea is ready to
conduct a sixth nuclear test. Strategists have said such a test
was likely at some point in the future, but the remarks reminded
markets that military tensions could escalate at any time on the
South Korea's newly elected liberal leader Moon Jae-in, who
will be sworn in on Wednesday, is expected to try to engage
Pyongyang with dialogue and aid, breaking from his predecessor's
"With this in the background, as well as the present
uncertainty in the U.S., the dollar will trade heavily today
below the 114-yen level," Imaizumi said.
The euro slipped 0.1 percent against the yen to 123.60
, moving away from Monday's one-year high of 124.58.
Bank of Japan Governor Haruhiko Kuroda refrained from
commenting on the exchange rate during a lower house fiscal and
monetary policy committee meeting on Wednesday, but said a weak
yen would help raise Japanese prices this fiscal year.
Kuroda said he was not currently thinking about ways to
change the BOJ's present policy mix.
The euro added 0.2 percent to $1.0895, edging back
toward a six-month high of $1.1024 hit on Monday, after centrist
Emmanuel Macron's victory in the French presidential election on
European Central Bank chief Mario Draghi is scheduled to
speak at the Dutch House of Representatives later on Wednesday.
Investors will be waiting to see if he alters his dovish tone in
light of recent strength in the euro zone economy.
(Reporting by Tokyo markets team; Editing by Simon