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FOREX-Dollar heads for worst week in over a year amid political uncertainty

Kitco News

* Dollar index poised for weekly decline of 2 percent

* Euro hits 6-month high

* Dollar adds losses after report White House official is person of interest in Russia investigation

* Dollar falls vs emerging market currencies

(Updates to afternoon U.S. trading)

By Dion Rabouin

NEW YORK, May 19 (Reuters) - The U.S. dollar fell on Friday, for its worst week since April 2016 against a basket of major currencies, having surrendered the gains made since Donald Trump was elected U.S. president.

The dollar index, which tracks the greenback against a basket of six world currencies, has shed more than 2 percent this week . On Friday, it fell 0.75 percent, hitting its lowest since Nov. 9, the day after the U.S. election.

Uproar over Trump's recent firing of FBI Director James Comey, who was overseeing an investigation into possible links between the president's team and Russia, has pressured the dollar.

"The dollar overall, across the board, has been getting beat up this week and a lot of that has to do with the political risk here in DC," said John Doyle, director of markets at Tempus Inc in Washington. "While we saw a little bit of a reprieve yesterday, we're right back on that dollar weakness train."

The U.S. currency has also suffered from a resurgent euro, which has the largest weighting in the dollar index. The single currency has gained more than 2.5 percent this week, headed for its best performance since February 2016. It rose 0.95 percent on Friday to a six-month high of $1.1205. The advance of the euro was spurred by a possible winding down of the European Central Bank's expansive monetary stimulus program, said analysts, with recent data pointing to a robust recovery in the euro zone.

Against the safe-haven Swiss franc, the dollar fell 0.45 percent, touching a six-month low. It was on track for its largest weekly percentage fall since February 2016.

The dollar fell 0.3 percent against the yen to 111.14 and had its first weekly drop in five against the Japanese currency.

The dollar moved broadly lower after a report that a senior White House adviser is a person of interest in the investigation into possible coordination between the Trump campaign and Russia. The greenback also sank against emerging market currencies, which were dragged lower on Thursday by news that Brazilian President Michel Temer had been recorded offering bribes to silence testimony by a potential witness in the country's wide-ranging corruption probe.

The dollar fell 3.3 percent against the Brazilian real .

Oil-linked emerging market currencies like the Mexican and Colombian pesos and the Russian rouble gained around 1 percent versus the dollar, also boosted by a rise in oil prices.

(Additional reporting by Jemima Kelly in London; Editing by Bernadette Baum and Steve Orlofsky)

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