* Dollar hits one-month high against basket of currencies
* Poor German manufacturing data adds to global economy woes
* Sterling hits 4-1/2 month low as Brexit worries mount
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Abhinav Ramnarayan
LONDON, May 23 (Reuters) - The dollar hit its highest level
in a month as economic and political uncertainties swept through
Europe and Asia, pinning down most major currencies such as the
euro and the yuan.
Worries over German manufacturing, the effect of a trade war
on Asian economies and deepening concerns over Brexit and
upcoming European parliamentary elections all make it an
uncomfortable time for many countries in Europe and Asia.
While the United States is not without its own worries -- a
trade conflict with China being a major one -- investors see the
greenback as a relative safe haven.
The dollar hit a high of 98.189 against a basket of six
major currencies .DXY , its highest level since April 26, when
it hit a two-year high of 98.33.
"Certainly the dollar has been acting like something of a
safe haven even though the Fed has been more dovish than has
been expected," said Neil Mellor, FX strategist at BNY Mellon.
"I think what's happened is that the Fed has been
'out-doved' by other central banks one by one, the latest being
the RBA [Reserve Bank of Australia] in Australia, and that has
allowed the dollar to strengthen," he added.
Fuelling this dovishness is a softening of the global
economy and there was further gloomy news on this front on
Thursday.
Activity in Germany's services and manufacturing sectors
fell in May, a survey showed on Thursday, reflecting the toll
that unresolved trade disputes are having on Europe's largest
economy. Concerns over the global economy have been compounded by
worries over political uncertainty, particularly in Europe.
Britain's political crisis deepened, with prominent Brexit
supporter Andrea Leadsom resigning from Prime Minister Theresa
May's government on Wednesday, piling pressure on the British
leader after a new Brexit gambit backfired and fuelled calls for
her to quit. This comes on a day in which European parliamentary
elections are due to begin, with eurosceptic parties expected to
poll well, worrying investors about the stability of the single
currency.
The euro EUR=EBS inched down to hit a one-month low of
$1.1133 in early trade while sterling was within a sliver of
slipping below $1.26 GBP=D3 for the first time since early
January.
The British currency is also set for its fourteenth straight
day of losses against the euro - its longest losing streak in
the 20-year history of the single currency. EURGBP=D3
YEN GAINS
The yen also advanced broadly on Thursday as persistent
U.S.-China trade fears and Brexit concerns fanned risk aversion,
lifting the safe-haven Japanese currency.
The yen JPY= was 0.1% firmer at 110.23 to the dollar,
having pulled back from a two-week low of 110.675 plumbed on
Tuesday.
The Japanese currency also rose 0.2% against the euro
EURJPY= , added 0.5% versus pound GBPJPY= and advanced 0.3%
on the Australian dollar AUDJPY= .
Reports that the United States could impose restrictions on
Chinese technology company Hikvision renewed market jitters
about trade on Wednesday, reversing a relief rally that followed
Washington's move to temporary ease curbs against Huawei
Technology Co Ltd HWT.UL .