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Global Stocks Fall on Political Turmoil in Washington

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News of President Trump Sharing Information With Russia Is Making the Dollar Cheaper

The dollar fell in Asia on Wednesday, with the chaotic US political situation weighing on expectations for economic policies favoring tax cuts and higher spending and as key lawmakers call for a memo reportedly written by former FBI director James Comey on Trump discussing an active investigation to be released.

May 17 (Reuters) - U.S. stocks braced for their worst day in at least two months as reports of a memo by former FBI chief James Comey suggested that President Donald Trump tried to interfere with a federal investigation, setting off alarm bells on Wall Street. Trump also fired Comey and has been accused of sharing senstive national security information with the Russians.

The dollar index has now fallen more than 5 percent from its 14-year high of 103.82 set on Jan 3, despite expectations of higher USA interest rates that should bolster the US currency. The greenback fell nearly 1.9% against the Japanese yen, which has been a traditional haven for risk-averse investors.

Oil blues: Oil prices pared back from its recent rally, after the American Petroleum Institute late Tuesday reported a climb of 882,000 barrels in USA crude supplies for the week ended May 12.

US manufacturing production recorded its biggest increase in more than three years in April but housing starts posted a surprise fall to five-month lows. The currency, which has gained 0.6 percent this week, traded in a range of C$1.3580 to C$1.3638.

The dollar dropped 0.5 percent to 112.64 yen, slipping further from its highs near 114.40 yen touched last week.

Against the resurgent Japanese currency, it tumbled half a percent to 124.68 yen, as investors locked in gains after the euro reached a 13-month high of 125.815 on Tuesday.

MSCI (Frankfurt: 3HM.F - news) 's gauge of stocks across the globe fell 0.9 percent, while European shares ended down 1.4 percent.

Elsewhere, Australia's S&P/ASX 200 was down 1.2%, while Korea's Kospi declined 0.5% and Singapore's Straits Times Index also lost 0.5%.

The pound rose above 1.30 against the USA dollar for the first time since September, as strong United Kingdom retail sales gave a boost to sterling and jitters surrounding calls for Donald Trump's impeachment weighed on the greenback.

The developments have left investors wondering whether the administration would be able to deliver pro-growth policies and tax reductions for corporations, as per Trump's campaign pledges.

The Dow Jones Industrials Average dropped around 220 points, or just over 1 percent, moments after trading began Wednesday, while the S&P 500 saw a similar decline after global stock markets and the dollar drifted lower overnight Tuesday and into Wednesday morning.

U.S. stocks dropped after the market opened today while safe haven assets gained amid political upheaval.

The benchmark 10-year U.S. Treasury bond rallied, dropping its yield to 2.21 percent.

"North Korea is getting closer to having an ICBM that could get close to Hawaii, with a scary payload; a USA preemptive strike is still on the table".

In commodities, oil prices continued their gains for the third straight session on optimism that producers will agree to rein in output for longer in order to soak up a global glut.

Spot gold rose for the fifth day and was up 1.8 percent at $1,258.28 an ounce by 2:40 p.m. EDT (1840 GMT), after hitting $1.260.20, the highest since May 1.

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