FOREX-Trade war hits Asian markets, pushing dollar to 4-week high

(Recasts; adds analyst quotes; updates prices; changes
dateline, previous LONDON)
By Kate Duguid
NEW YORK, May 21 (Reuters) - Signs that Asia is already
feeling the pinch from a trade conflict between the United
States and China pushed the U.S. dollar to a four-week high on
Tuesday, while higher U.S. Treasury yields helped the move.
Data showed economic growth in Singapore was its lowest in
nearly a decade in the first quarter, while in Thailand it was
at its lowest in four years, raising worries that major Asian
economies will be hurt by global trade tensions. "Global growth prospects seem to be getting gloomier by the
day," wrote Hans Redeker, global head of foreign exchange
strategy at Morgan Stanley. He also cited a decline in South
Korea's exports in the first 20 days of May, a fall in steel
prices and the weakest Japanese condominium sales since 2016.
"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
foreign exchange 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 United States temporarily eased trade restrictions on
China's Huawei HWT.UL to minimize disruption for its
customers, a move which boosted Asian equities and helped the
offshore Chinese yuan CNH= pull back from its weakest levels
since November, where it has hovered since Friday. But the
relief is not expected to be lasting. "Asian equity markets reacted positively to the news, but
there should only be limited follow-through, as uncertainty
remains high, and this uncertainty may potentially prompt
companies to cut back on existing capex plans," said Redeker.
The dollar index .DXY which measures the currency against
a basket of six rivals, was 0.16% higher, last at 98.088.
Against the euro EUR= , the U.S. dollar was 0.2% stronger,
last at $1.115. The single currency is being hurt by dollar
strength and also by upcoming European parliamentary elections
in which euroskeptic parties may fare well.
The greenback may have also been lifted by a fall in
Treasury bond prices, which saw the 10-year yield US10YT=RR
rise to a one-week high of 2.435% on the back of some positive
comments on the U.S. economy from policymakers. US/
Elsewhere, Australia's top policymaker Philip Lowe said on
Tuesday the Reserve Bank of Australia would consider the case
for lower interest rates at its June policy meeting, pushing the
Aussie dollar AUD= 0.54% lower to $0.687.