May 22, 2017 / 4:01 PM / 3 months ago

FOREX-Dollar weak as political risks linger; euro bounces on Merkel comments

* Euro hits 6-1/2 month high on Merkel comments

* Dollar index hovers near more than six-month low

* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Updates with U.S. market open; changes dateline from LONDON)

By Saqib Iqbal Ahmed

NEW YORK, May 22 (Reuters) - The dollar slipped to a more than six-month low against a basket of currencies on Monday, extending its losses from last week, as an uncertain U.S. political climate continues to weigh on the greenback.

The dollar index, which tracks the greenback against a basket of six major rivals, was down 0.15 percent to 96.993. It fell to a low of 96.797, its lowest since Nov. 9, earlier in the session.

"I think it is a continuation of the move we have seen since mid-April," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"The dollar's broad declines are driven by the increasingly mixed tone to U.S. economic data, which has led to investors questioning the extent to which the Fed will be raising rates this year. The political climate is also acting as a key headwind for the dollar."

The dollar fell more than 2 percent last week, logging its worst performance in over a year, amid growing concerns over U.S. President Donald Trump's recent firing of FBI Director James Comey, who was overseeing an investigation into possible links between the president's team and Russia.

Political turmoil in Washington has also raised worries that there could be delays in Trump's efforts to implement his economic stimulus plans and a shortening of the odds on betting markets that he would not see out the term begun in January.

"At best now, this is likely to result in a very low chance for a bold fiscal package any time soon," Esiner said.

The greenback also came under pressure from a rallying euro, which hit a more than six-month high against the dollar on Monday after Germany's Angela Merkel prefaced a summit of G7 leaders later this week by saying a "too weak" currency was behind her country's massive trade surplus.

Speaking to students at a secondary school in Berlin, Merkel said that Germany's huge export earnings were propelled by two factors over which the government had no influence, namely the euro's exchange rate and oil prices.

The euro was up 0.23 percent against the dollar at $1.123 after hitting a high of $1.1263, earlier in the session.

Meanwhile, sterling slipped against the dollar after a pair of polls over the weekend showing Prime Minister Theresa May's opinion poll lead falling back into single figures ahead of next month's election.

Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci

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