* Dollar falls broadly after reports on Trump and Russia
* Euro buoyed by expectations for strong GDP data
* Doubts creeping in over June Fed hike
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, May 16 The euro rose above $1.10 on
Tuesday to hit its highest since Donald Trump was elected U.S.
president in November, as political turmoil and doubts over
interest rate rises pressured the dollar, while traders expected
robust euro zone growth data.
The dollar index, which measures the greenback
against six other major currencies, and which rose to 14-year
highs earlier this year on the view that Trump's plans for tax
cuts and infrastructure spending would boost growth and
inflation, fell to its weakest in over six months.
It was down 0.4 percent on the day at 98.555, down over 5
percent from its January peak.
Analysts said the latest weakness was largely a product of
worries over reports that Trump had disclosed highly classified
information to Russia's foreign minister about a planned Islamic
State operation in a meeting last week.
That raised fears that Trump might not last his first term
and that, even if he did, there were too many distractions for
him to be able to successfully push through his economic
"(The story about Trump and Russia) probably is playing out
as a weaker dollar on the view that Trump may not be around long
enough to deliver his tax reform, which is at least partially
priced into the dollar," said RBC Capital Markets currency
strategist Adam Cole, in London.
While the dollar was down across the board, the euro
appeared to be the main beneficiary of its weakness, trading up
as much as 0.6 percent on the day and reaching $1.10365,
its highest since Nov. 9.
Traders were eyeing GDP data due at 0900 GMT, which was
expected to show the euro zone grew at a healthy 1.7 percent
year-on-year in the first quarter.
While the euro zone picks up speed, doubts are creeping in
that the U.S. Federal Reserve might not deliver the June rate
increase markets had been almost fully pricing in last week,
after some weaker-than-expected U.S. data.
Investors are still pricing in around a 73 percent chance of
a June hike, but that was down from a more than 80 percent
chance last week, according to CME's FedWatch tool.
And Citi’s U.S. economic surprise index continues to plunge
deeper into negative territory, falling to its lowest level
since May last year, while the euro zone equivalent remains
close to its highest levels of the year.
With concerns about political risks in the euro zone having
receded after centrist Emmanuel Macron was elected France's
president over far-right nationalist Marine Le Pen, focus is
shifting back towards the outlook for monetary policy.
Investors are now focusing on when and how the European
Central Bank (ECB) could scale back its quantitative easing
given the recent strength in the euro zone economy.
"Long positions in the euro tend to be favoured now, given
the chances that the ECB could discuss the possibility of future
policy changes at its June meeting," said Shinsuke Sato, head of
FX trading group for Sumitomo Mitsui Banking Corporation in
"Overall, there seems to be a mood of looking for chances to
buy (euros) on dips," he added.
Against the yen, the dollar fell 0.3 percent to 113.45
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
(Additional reporting by Masayuki Kitano in Singapore; Editing
by Keith Weir)