* North Korea's missile test underpins safe-haven yen
* Yellen's remarks cement rate-hike expectations
* Speculators trim dollar-long positions -IMM data
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, March 6 The dollar slipped in European
trading on Monday, as investors took profits after the
currency's boost last week on the expectation that the U.S.
Federal Reserve will hike interest rates this month.
News earlier in the day of North Korea firing four ballistic
missiles, three of which landed in Japanese waters, also
pressured the greenback as investors bought into the perceived
Fed Chair Janet Yellen on Friday said the U.S. central bank
was set to lift its benchmark interest rate this month, provided
jobs and inflation data hold up, which markets saw as cementing
a hike at the bank's next meeting.
The comments, on the back of a string of hawkish commentary
by Federal Reserve officials, saw the dollar slip on Friday as
investors took profits from its fourth straight weekly gain
against a basket of major currencies, and it slipped
another 0.3 percent on Monday to a one-week low of 101.22.
"It's a continuation of the price action we had on Friday in
the wake of Yellen's speech," said Credit Agricole currency
strategist Valentin Marinov in London, adding that he saw a
positive outlook for the dollar over the long term.
"There is some concern in the market that the hike won't be
accompanied by more hawkish forward guidance (that would
suggest) the Fed would hike three or even four times this year."
Fed funds futures pricing shows traders see around an 80
percent chance of a rate increase this month, up from just a
one-in-three chance early last week, according to CME Group's
Fed Watch tool.
Still, speculators reduced bullish bets on the U.S. dollar
in the week ending Feb. 28, pushing net longs to their lowest
since early October, according to Commodity Futures Trading
Commission data released on Friday and calculations by Reuters.
As risk appetite fell on the news from North Korea, the
greenback dipped 0.4 percent against the yen to 113.68,
down from Friday's high of 114.75.
"North Korea is unpredictable, but it fairly frequently
conducts missile tests," said Kaneo Ogino, director at foreign
exchange research firm Global-info Co in Tokyo.
"One difference now is that it is also hard to predict how
President (Donald) Trump will respond to such tests," he said.
U.S. political developments also weighed on the dollar.
Trump on Saturday accused his predecessor Barack Obama of
wiretapping him during the 2016 election campaign, an accusation
rejected by Obama and a top former intelligence official.
The euro rose to a two-week high of $1.0640, as
investors continued to monitor France's presidential race.
Scandal-hit conservative candidate Francois Fillon said on
Sunday he was staying in the race but left the door open to
talks with senior members of his party who are increasingly
anxious about his bid.
Latest polls show Alain Juppe, who is more centrist than
Fillon, would reach the second round should he replace him as
the Republicans candidate.
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 Tokyo markets team; editing by Richard