* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Daniel Leussink
TOKYO, May 22 (Reuters) - The dollar hovered near a
four-week high on Wednesday, supported by higher U.S. yields
after the United States eased trade restrictions on Chinese
telecommunications equipment maker Huawei Technologies.
The move came as a relief to markets hit by escalating trade
tensions between the United States and China, though analysts
said sentiment remained fragile with tariff negotiations between
the world's two largest economies yet to produce a durable
solution.
"The trade dispute won't be resolved easily, so the risk-off
mood won't come off all of a sudden. I think market sentiment
will rather improve one small step at a time," said Ayako Sera,
market strategist at Sumitomo Mitsui Trust Bank.
Against a basket of key rival currencies, the dollar was
last a shade lower at 98.014 .DXY , having brushed a 3-1/2-week
high of 98.134 overnight. The index has risen 1.9% so far this
year.
The U.S. Commerce Department blocked Huawei Technologies Co
Ltd HWT.UL from buying U.S. goods last week, leading several
companies to suspend business with the world's largest telecoms
equipment maker.
Chipmakers, many of which sell to Huawei, bore the brunt of
the sell-off. But late on Monday, the United States granted
Huawei a licence to buy U.S. goods until Aug. 19. Against the yen, the dollar was largely steady at 110.49 yen
JPY= , having hit a two-week high of 110.675 during the
previous session. The greenback has recovered 1.4% from a
three-month trough of 109.02 yen touched on Monday last week.
Japan's exports fell 2.4% in April from a year earlier, down
for a fifth straight month, in a sign of weakness in external
demand, finance ministry data showed, compared with a 1.8%
decrease expected by economists in a Reuters poll. Sumitomo Mitsui's Sera said the yen's weakness overnight was
thanks to the higher U.S. Treasury yields, which ticked up in
response to the recovery in U.S. equities.
"When yields are rising, it's natural for the dollar to be
bought. I think moves in U.S. yields are really important," she
said.
The 10-year U.S. Treasury note yield US10YT=RR was last
largely unchanged at 2.423% after moving further off a
seven-week low of 2.354% brushed on Thursday during the previous
session.
The euro EUR= was steady at $1.1162 EUR= .
The single currency, which has given up 0.9% from this
month's high touched on May 1, has been under pressure in recent
weeks on dollar strength and due to concerns the upcoming
European parliamentary elections may see euroskeptic parties
faring well.
The pound was at $1.2713 GBP=D4 , hovering near a
four-month low of $1.2685 touched overnight. It briefly rose
overnight after Prime Minister Theresa May set out a "new deal"
for Britain's departure from the EU, offering sweeteners to
Parliament including the chance to vote on whether to hold a
second referendum to try to break the impasse over Brexit.
Yet traders doubted that a fractious Parliament would have
to back any new referendum.
(Editing by Shri Navaratnam)