FOREX-Pain in Asia pushes dollar to 2-1/2 week high as investors seek safety

* Poor data from Singapore, Thailand, pushes investors to
dollar
* Greenback hits 2-1/2 week high against basket of
currencies
* Aussie down as RBA governor signals possible June rate cut
* Euro at lowest since May 3 ahead of EU vote
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Abhinav Ramnarayan
LONDON, May 21 (Reuters) - Signs that Asia is already
feeling the pinch from a trade conflict between the United
States and China triggered some safe haven flows to the US
dollar on Tuesday, while higher U.S. Treasury yields made the
trade more palatable.
Surprisingly soft economic growth data from Singapore and
Thailand have raised worries that major Asian economies will be
hurt by global trade tensions. Meanwhile, Australia's top policymaker Philip Lowe said on
Tuesday the RBA will consider the case for lower interest rates
at its June policy meeting, pushing the Aussie dollar AUD=D3
lower half a percent to $0.6873. "The situation in Asia is difficult - Thailand, Singapore,
export decline in Korea - which shows that the trade conflict is
hurting even without a further escalation," said Commerzbank FX
strategist Esther Maria Reichelt.
"This is the main cause behind the dollar strength, if
anything I was little bit surprised we didn't see a more
pronounced risk movement," she added.
The dollar hit a 2-1/2 week high against a basket of six
major currencies, rising 0.2% to 98.11 .DXY in early European
trade.
It may have also been helped by higher U.S. Treasury yields,
with the 10-year yield US10YT=RR rising to a one-week high of
2.428% on the back of some positive comments on the U.S. economy
from policymakers. US/
Yields also rose as the U.S. government temporarily eased
trade restrictions imposed last week on China's Huawei, a move
aimed at minimising disruption for its customers.
Conversely, the euro -- which makes up a significant chunk
of that basket -- hit a 2-1/2 week low of $1.1144 EUR=EBS .
While this is primarily on the dollar move, the single
currency is also being hurt by upcoming European parliamentary
elections in which eurosceptic parties may fare well.
A successful outing for right-wing Italian parties in
particular could mean new domestic elections in the euro zone's
third largest economy, and potentially a new coalition of right
wing parties led by Matteo Salvini's League.
"That would be decidedly negative for the euro, because
Salvini has been much less willing to abide by EU rules – he
recently said he'd break the EU's budget deficit rules if
necessary to get employment up," said Marshall Gittler, a
strategist at ACLS Global.
Sterling GBP=D3 fell below $1.27 for the first time since
mid-January ahead of a UK cabinet meeting in which senior
ministers will consider the merits of whether lawmakers should
hold indicative votes on Brexit options.