* Comey firing boosts safe-haven assets
* Concerns about possible North Korean test also underpin
* Euro back toward six-month highs touched after Macron's
(Updates prices, adds comment, changes byline, dateline,
By Gertrude Chavez-Dreyfuss
NEW YORK, May 10 The dollar slipped on Wednesday
as risk appetite faded after U.S. President Donald Trump
unexpectedly fired FBI Director James Comey, raising questions
about whether this latest crisis could impede the implementation
of the government's economic agenda.
"The tone is mildly risk-averse but perhaps reflects a
collective shift to neutral for markets, until there is a little
more clarity on the Trump/FBI front," said Shaun Osborne, chief
FX strategist at Scotiabank in Toronto.
Trump said Comey - who had been leading an investigation
into his 2016 presidential campaign's possible collusion with
Russia to influence the election outcome - was let go due to his
mishandling of an email scandal involving presidential nominee
But the move ignited a political firestorm, raising
suspicions that the White House was trying to blunt the FBI
probe involving Russia.
The market though remains dollar-bullish especially against
the yen as investors expect U.S. growth to pick up in the second
half of the year and the Federal Reserve to maintain its
However, that outlook depends largely on a generally smooth
political environment that would allow Trump to focus on
domestic issues and an eagerly-anticipated tax reform
legislation," said Boris Schlossberg, managing director of FX
Strategy at BK Asset Management in New York.
"If yesterday's action (Comey firing) is just the start of a
massive constitutional confrontation with both Republicans and
Democrats demanding an independent prosecutor on Russia
collusion probe, then much of Mr. Trump political capital will
be wasted on defending himself against accusations of
malfeasance," said Schlossberg.
The dollar, which had strengthened to as much as 114.32 yen
on Tuesday, slid back to 113.90 yen, down 0.1 percent.
Against a basket of six currencies, the dollar was down 0.1
percent at 99.55.
Rekindled worries that North Korea could be gearing up for
another weapons test underpinned the safe-haven yen as well.
The yen had sunk to an eight-week low the previous day as
appetite for riskier currencies increased after a French
election result that eased euro break-up fears.
Comments from European Central Bank President Mario Draghi
on Tuesday, meanwhile, failed to have any impact on the euro,
which was flat at $1.0875. Draghi said it was too early
for the ECB to declare victory in its quest to boost euro zone
The euro had risen to a six-month high above $1.10 on
Monday, after Emmanuel Macron defeated the anti-EU Marine Le Pen
in France's presidential run-off, as worries over European
political risk faded.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Jemima Kelly in London; Editing by Alistair Bell)