* Yen rises to two-week highs
* Swiss franc rises to seven-week highs
* Dollar index surrenders all of its ‘Trump bump’
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, May 17 (Reuters) - The yen rose to its highest in two weeks and the Swiss franc hit a seven-week high against the U.S. dollar on Wednesday as talk that President Donald Trump could face the threat of impeachment boosted safe-haven assets.
The dollar index, which scaled a 14-year peak of 103.82 on Jan. 3 in anticipation of the U.S. president’s promised tax reform and stimulus measures, wallowed near its lowest levels since Nov. 9 after giving back all of its “Trump bump”.
News emerged on Tuesday that Trump had asked his now-dismissed FBI chief James Comey to end the agency’s investigation into ties between former White House national security adviser Michael Flynn and Russia.
That raised questions about whether Trump tried to interfere with a federal investigation, spurring some speculation over the likelihood of an early exit from office for the former businessman.
“Concerns over the possibility of the impeachment of Trump are rising a bit due to recent news over his communication with the FBI and so on,” said Yujiro Goto, currency strategist with Nomura in London.
“We think that this is unlikely to lead to a kind of impeachment or regime change for the US government anytime soon. Therefore, this (risk-off move) could be a bit short term.”
The yen rose to 0.7 percent to 112.24 yen per dollar, its highest level since May 5, while the Swiss franc rose to 0.9820 francs per dollar, its highest since March 27.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, remained under pressure at 97.941, down 0.2 percent on the day.
Interest rate futures showed the market was still pricing in a nearly three in four chance that the Fed will implement a June hike, but that was down from over 80 percent a week ago, according to the CME Group’s FedWatch Tool.
The euro climbed above $1.11 overnight, and hit $1.1122, its highest level since Nov. 9, in early European trading hours. It was last up 0.2 percent at $1.1107. EUR-EBS
Against the resurgent Japanese currency, it tumbled 0.7 percent to 124.83 yen, as investors locked in gains after the euro reached a 13-month high of 125.815 on Tuesday.
“Although the latest headlines from Washington were a driving force behind the latest push higher in the currency pair, the euro’s attractiveness has certainty improved in recent weeks,” Rabobank strategists wrote in a note.
“The victory of (Emmanuel) Macron in the French presidential election and the better than expected performance of the Eurozone economic recovery in the year to date have been instrumental in lifting confidence.”
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Additional reporting by Tokyo Markets Team; Editing by Tom Heneghan