* Dollar falls broadly on worries over Trump
* Doubts creeping in over Fed rate hike in June
* Euro buoyed by strong GDP data, euro integration
(Updates with afternoon U.S. trading, adds data)
By Dion Rabouin
NEW YORK, May 16 The euro surged more than 1
percent against a broadly weaker dollar on Tuesday, nearly
touching $1.11 as it rose to its highest level since Donald
Trump was elected U.S. president in November.
The dollar fell after the release of weaker-than-expected
data on U.S. housing starts, adding to the economic reports that
have missed predictions.
While the dollar made a modest recovery after data showed
U.S. manufacturing production recording its largest increase in
more than three years, investors again soured on the greenback
in later trading.
Data released earlier in the day showed the euro zone
economy growing 1.7 percent year-on-year in the first quarter,
in line with expectations.
Emmanuel Macron's victory in France's presidential election
and growing expectations of further European integration, as he
seeks deeper ties with Germany, have also helped bolster the
euro, analysts said.
The euro jumped widely, touching its highest level since
April 2016 against the yen and its highest level since
March 31 versus sterling.
The dollar's sell-off looked like it had further to go, said
Boris Schlossberg, managing director of FX strategy at BK Asset
Management, given the potential for further political fallout
relating to reports that Trump disclosed highly classified
information to Russian officials last week.
"It seems like progressively every single day it gets more
and more beyond any sense of normal leadership and ultimately
that kind of political volatility does translate into economic
volatility," Schlossberg said.
Fears are growing among investors that Trump might not serve
out his first term, analysts said. Even if he does, they said,
there would be too many political distractions for him to push
through his economic stimulus program.
The dollar index had risen 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, but it
fell on Tuesday to its lowest level since Nov. 9.
Weaker-than-expected U.S. data is causing traders to wonder
whether the U.S. Federal Reserve will fail to raise rates at its
policy meeting next month.
Investors are still pricing in around a 74 percent chance of
a June hike, but that is down from more than 80 percent last
week, according to CME Group's FedWatch tool.
(Reporting by Dion Rabouin; Additional reporting by Jemima
Kelly in London; Editing by Lisa Von Ahn and Paul Simao)