* Concerns about possible North Korean test also underpin
* Dollar pressured as U.S. Treasury yields turn lower
* Euro back toward six-month highs touched after Macron's
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, May 10 The dollar steadied close to an
eight-week high against the safe-haven yen on Wednesday as risk
appetite - historically high in recent days - recovered from a
dip in Asian trading when U.S. President Donald Trump abruptly
fired the head of the FBI.
Trump said he had sacked FBI Director James Comey - who had
been leading an investigation into the Trump 2016 presidential
campaign's possible collusion with Russia to influence the
election outcome - over his handling of an email scandal
involving presidential nominee Hillary Clinton.
But Democrats immediately accused Trump of having political
motives, piquing investors' aversion to risk, and sending the
dollar down as much as 0.6 percent against the yen, a
currency that investors favour at times of uncertainty.
By 0752 GMT, though, the strong risk appetite that has
dominated global markets this week appeared to be returning, and
the dollar edged back above 114 yen, close to the previous day's
high of 114.325.
Both realised and implied volatility have fallen sharply
since Emmanuel Macron defeated the anti-EU Marine Le Pen in
France's presidential run-off on Sunday, as worries over
European political risk have faded and focus has returned to
central bank policy.
The Swiss franc, another safe-haven currency, fell to its
lowest in seven months on Tuesday and stayed close to that at
1.09575 francs per euro, flat on the day.
Commerzbank currency strategist Esther Reichelt, in
Frankfurt, though, said risk appetite could only drive the
currency market so far before new drivers were needed.
"Dollar strength could materialize more, given the more
benevolent risk environment, but that can only move the market
for so long – you always need new impetus," she said.
The dollar index, which tracks the greenback against a
basket of six major currencies, had hit a three-week high of
99.688 on Tuesday, but it slipped 0.2 percent to 99.415
U.S. political uncertainty has tended to weigh on the dollar
in recent months, on the view that a divided Congress could
derail Trump's promised tax reform and stimulus programme.
"The 'Trump trade' lifted the dollar after the election, but
now we have to see if he can deliver on all of his promises,"
said Bart Wakabayashi, branch manager for State Street Bank and
Trust in Tokyo.
The euro edged up 0.1 percent against the yen to 124.31
, close to Monday's one-year high of 124.58.
Against the dollar, it gained 0.2 percent but stayed below
$1.09, having topped $1.10 after Macron's election win.
Focus was on a speech later in the Netherlands by European
Central Bank chief Mario Draghi, who will be watched for a
possible move towards a more hawkish tone amid strength in the
euro zone economy and receding political risks.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Jemima Kelly, editing by Larry King)