NEW YORK (Reuters) - The dollar climbed to eight-week highs against the safe-haven yen on Wednesday, bolstered by the surge in oil prices and a modest recovery in U.S. Treasury yields after a particularly soft 10-year note auction.
Another safe-haven currency, the Swiss franc, slipped as well with the general uptick in risk appetite.
Vassili Serebriakov, currency strategist at Credit Agricole in New York, said the weak U.S. Treasury 10-year note auction as well as oil prices hitting new highs had boosted yields, helping the dollar's cause.
Benchmark U.S. 10-year yields, which move inversely to prices, hit session highs following an auction that showed weak investor demand.
U.S. crude futures, on the other hand, hit a one-week high on Wednesday and were last at $47.27 per barrel, up 1.4 percent.
"This dollar move in the yen suggests risk appetite is increasing and mostly being seen in commodities," said Juan Perez, currency trader at Tempus Consulting in Washington.
The market seemed to have temporarily moved on from U.S. President Donald Trump's unexpected dismissal of FBI Director James Comey late on Tuesday.
The president said Comey, who had been leading an investigation into the Trump presidential campaign's alleged collusion with Russia to influence the election outcome, was let go because of his mishandling of an email scandal involving 2016 Democratic presidential nominee Hillary Clinton.
Russia has denied any such meddling. The Trump administration denies allegations of collusion with Moscow.
Trump's firing of Comey ignited a political firestorm, raising suspicions the White House was trying to blunt the FBI probe involving Russia. It also fuelled doubts about the government's ability to implement its economic agenda.
The market remains dollar-bullish against the yen, however, as investors expect U.S. growth to pick up in the second half of the year and the Federal Reserve to maintain its rate-hike stance.
But that outlook depends largely on a generally smooth political environment that would allow Trump to focus on domestic issues and eagerly anticipated tax reform legislation, said Boris Schlossberg, managing director of FX Strategy at BK Asset Management in New York.
He added that Comey's dismissal could be just the start of acrimonious battles in Congress and that much of Trump's political capital could be wasted on defending himself against accusations of wrongdoing.
In late trading, the dollar rose 0.2 percent to 114.27 yen, after earlier rising to an eight-week peak of 114.35.
The greenback was also up 0.1 percent against the Swiss franc at 1.0086 francs. Against a basket of six currencies, the dollar was flat at 99.674.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Alistair Bell and Peter Cooney