Dollar hits one-month high as uncertainty plagues Europe and Asia - EntornoInteligente
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LONDON (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.

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration 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, 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 fueled 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 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 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.

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 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, added 0.5% versus pound and advanced 0.3% on the Australian dollar.

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.

Reporting by Abhinav Ramnarayan; Editing by Raissa Kasolowsky

LINK ORIGINAL: Reuters

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