CURRENCIES: Dollar Drops Against The Euro, Sterling After Trump Fires FBI Chief Comey

By Barbara Kollmeyer, MarketWatch Features Dow Jones Newswires

But greenback recovers some ground against the yen

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The U.S. dollar traded lower against some rivals on Wednesday, which some analysts attributed in part to President Donald Trump's abrupt firing of James Comey as director of the Federal Bureau of Investigation.

The ICE Dollar Index shed 0.1% at 99.59, but was off an intraday low of 99.37.

The dollar recovered some ground against the Japanese yen after dropping to Yen113.63 in earlier trading. The pair last traded at Yen113.91, against Yen113.87 late Tuesday.

The bulk of the dollar's weakness was concentrated in the British pound and euro crosses. The pound moved higher to $1.2953 from $1.2935 late Tuesday, while the euro rose to $1.0882 from $1.0872.

Analysts at Sucden Financial noted the dollar fell Tuesday on after the U.K. ambassador to North Korea said there could be another nuclear test. U.S. politics also cast a shadow, they said.

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"President Trump's decision to fire FBI Director Comey also had some negative impact on the dollar, especially with concerns that it would undermine progress in securing congressional support for tax reform," said the Sucden analysts in a note to clients.

U.S. President Donald Trump dismissed Comey on Tuesday (http://www.marketwatch.com/story/trump-fires-fbi-director-comey-democrats-call-for-special-prosecutor-in-russia-probe-2017-05-09) over the FBI director's handling of the probe into his presidential election rival Hillary Clinton's emails. The firing was effective immediately, and the White House said the search for Comey's successor (http://www.marketwatch.com/story/complete-text-of-white-house-statement-on-firing-of-fbi-director-james-comey-2017-05-09) would begin immediately.

But others noted the Bank of England inflation report and rate announcement due Thursday might be driving interest in the U.K. pound, which is also closing in on a key level for investors.

"Sterling bid up heavily on the open today as traders eye a potential assault on the psychologically important $1.30 handle, which if breached could yield a fresh leg higher for the pound," said Neil Wilson, senior market analyst at ETX Capital.

Wilson noted that sterling is also now getting close to a closely watched technical momentum indicator.

"Cable is within spitting distance of the so-called 'golden cross,' when the 50-day moving average cuts up through the 200-day average. From a technical standpoint, this is a strong bullish signal and coupled with a move beyond $1.30 could drive further gains," he said in a Wednesday note to clients.

(END) Dow Jones Newswires

May 10, 2017 05:51 ET (09:51 GMT)