* Perceived safe-haven yen rises to one-week highs
* Downbeat U.S. housing data offsets strong manufacturing
* Dollar index surrenders all of its 'Trump bump'
TOKYO, May 17 The dollar nursed its losses on
Wednesday after taking a hit from solid eurozone economic data,
a fall in U.S. yields on heightened turmoil in Washington and
downbeat housing data that reduced expectations of a Federal
Reserve rate hike next month.
The dollar index, which scaled a 14-year peak of 103.82
on Jan. 3 on hopes for tax reform and stimulus measures
from the administration of U.S. President Donald Trump, gave
back all of its "Trump bump" and wallowed near its lowest levels
since Nov. 9.
The index, which tracks the U.S. currency against a basket
of six major rivals, last stood at 97.929, down 0.2 percent on
Pressure on the dollar increased after news that Trump asked
his now-dismissed FBI Director James Comey to end the agency's
investigation into ties between former White House national
security adviser Michael Flynn and Russia, according to a source
who has seen a memo written by Comey.
The memo raises questions about whether Trump tried to
interfere with a federal investigation at a time when investors
were beginning to doubt that his administration would be able to
get a divided U.S. Congress to support its promised policy
"Investors need to see if he can carry out all of his
original ideas, compromise, and get organised," said Kaneo
Ogino, director at foreign exchange research firm Global-info Co
"There are still Japanese institutional investors who want
to buy the dollar on dips, but for now, they're standing back to
see what happens next, " he added.
The dollar skidded 0.5 percent to one-week lows against its
perceived safe-haven Japanese counterpart and last stood at
"The political shenanigans in Washington concerning Trump
appear to be denting appetite for the U.S. dollar at the moment,
but it's run into technical selling as well," said Sue Trinh,
head of Asia FX strategy at Royal Bank of Canada in Hong Kong.
"The move in FX looks to be exaggerated by the addition of
the systematic selling of the U.S. dollar by technical trading
accounts," she said.
U.S. Treasury yields fell after data showing U.S.
homebuilding unexpectedly dropped last month, adding to a recent
spate of mixed data that has raised doubts about the U.S.
monetary policy outlook. Separate data showed U.S. manufacturing
production recorded its biggest increase in more than three
years in April.
The yield on benchmark 10-year notes fell to a
two-week low of 2.291 percent in early Asian trade, down from
its U.S. close on Tuesday of 2.327 percent. It last stood at
Interest rate futures showed the market was still pricing in
a nearly three in four chance that the Fed will implement a June
hike, but that was down from over 80 percent a week ago,
according to the CME Group's FedWatch Tool.
Investors were pricing in slightly below an even chance for
two or more rate increases in 2017, despite central bankers'
stated view that they will hike two more times this year.
The euro added 0.1 percent to $1.10965 after earlier
touching $1.1098, its highest since November.
Against the resurgent Japanese currency, the euro tumbled
0.4 percent to 124.88, as investors locked in gains
following the European currency's move to a 13-month high of
125.815 on Tuesday.
Data on Tuesday showed the euro zone growing at 1.7 percent
year-on-year in the first quarter, in line with expectations.
(Reporting by Tokyo markets team; Editing by Eric Meijer and