* Dollar dips vs yen but dollar outlook still rosy
* U.S. data reinforces rate hike
* New Zealand dollar down 1.5 pct on central bank outlook
(Recasts throughout, adds comment, U.S. data, changes byline,
dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 11 The U.S. dollar fell for the
first time in five days against the yen on Thursday as investors
locked in recent gains and amid concerns after U.S. President
Donald Trump unexpectedly dismissed the Federal Bureau of
Investigation chief James Comey.
"This could be position-squaring in dollar/yen," said Mark
McCormick, North American head of FX strategy at TD securities
"The pair has reached levels such as breaking 113.50 yen.
Now we do need impetus from new drivers because the day-to-day
stuff we track shows dollar/yen has been overbought," he added.
Still, the outlook for the greenback is bright, especially
after upbeat U.S. data on Thursday solidified expectations of an
interest-rate hike by the Federal Reserve next month.
Data showed U.S. initial jobless claims unexpectedly fell
last week, while producer prices rebounded strongly in April.
Following the report, interest rate futures priced in a more
than 80 percent probability that the Fed will tighten policy
again next month.
"Along with the fact that the dollar is trading cheaply to
rate differentials, the fact that U.S. rates are starting to
rise and price in more certainty around a June hike has favored
a better outlook for the U.S. dollar," McCormick said.
The firing of Comey still weighs on the currency market.
Days before his sacking, the former FBI director told lawmakers
he had sought more resources for his agency's probe into
possible collusion between the presidential campaign of Donald
Trump and Russia to sway the 2016 U.S. election.
Sterling, meanwhile, hit a one-week low against the dollar
after the Bank of England's inflation report showed interest
rates are unlikely to rise within the next two years.
The BoE's Monetary Policy Committee also voted 7-1 in favor
of keeping interest rates on hold this month.
In late morning trading, the dollar fell 0.6 percent against
the safe-haven yen to 113.61 yen. Against another
safe-haven currency, the Swiss franc, the dollar fell 0.2
percent to 1.0069 franc.
The dollar index was down 0.1 percent at 99.606
against a basket of major currencies.
Sterling, meanwhile, slid 0.5 percent to $1.2879.
The New Zealand dollar sank to an almost one-year low after
the Reserve Bank of New Zealand stuck to a neutral bias on
policy, warning investors they were reading the outlook wrong
and expressing approval of the currency's declines this year.
The kiwi was last down 1.4 percent against the greenback at
(Additional reporting by Patrick Graham in London; Editing by