4 Min Read
* Political tumult in Washington weighs on greenback
* Dollar index poised for weekly loss of 1.5 pct
* Brazil's real nurses losses after previous day's slide (Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, May 19 (Reuters) - The dollar sagged against the yen on Friday and was on track for weekly losses, bruised by worries that political turmoil in Washington could delay efforts by U.S. President Donald Trump to implement his economic stimulus plans.
The dollar eased 0.1 percent to 111.39 yen, having set a three-week low of 110.24 yen on Thursday. The dollar is down about 1.7 percent against the yen for the week, putting it on track for its biggest weekly fall in a month.
The greenback had gained some reprieve on Thursday, helped by solid U.S. economic data, including a jump in the Philadelphia Fed's gauge of mid-Atlantic manufacturing activity in May.
Focus will remain on the Trump administration's troubles following the controversial dismissal of the Federal Bureau of Investigation's director, James Comey, and that could continue to weigh on the dollar, analysts said.
"It hasn't gone away...and so the market will be swayed by any related headlines," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
Trump, striking a defiant tone on Thursday after days of political tumult, denied colluding with Russia during his 2016 campaign or asking Comey to drop a probe into disgraced former national security advisor Mike Flynn.
On Wednesday, the Justice Department appointed former FBI chief Robert Mueller on Wednesday as special counsel to probe possible ties between Russia and Trump's 2016 presidential campaign.
"I think we will get a lot more...headlines in coming weeks and months, especially as the investigations takes place," said Tan Teck Leng, forex analyst for UBS Wealth Management in Singapore. "It will be a hit sentiment for the dollar."
Against a basket of six major currencies, the dollar held steady at 97.797.
The dollar index, which fell to a six-month low of 97.333 on Wednesday, is down nearly 1.5 percent for the week, putting it on track for its biggest weekly slide since July 2016.
The euro was last trading at $1.1112, up 0.1 percent on the day but down from a six-month high of $1.1174 set on Thursday.
UBS Wealth Management's Tan said the euro will probably rise over the next several months, supported by the euro zone's improving growth momentum. He also expected the European Central Bank (ECB) to start signalling in June or July its intent to begin reducing its asset-buying programme.
Tan expected the ECB to announce in September that it will start reducing its monthly asset purchases from January 2018. The ECB is currently purchasing 60 billion euros a month, mostly in bonds.
Elsewhere, among emerging market currencies, the Brazilian real nursed losses after slumping 8 percent on Thursday following allegations that President Michel Temer condoned bribes to silence a key witness in a corrpution scandal.
The real last stood at 3.3685 per U.S. dollar. (Reporting by Masayuki Kitano; Editing by Simon Cameron-Moore)