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Dollar yields rise as Stocks recover, US softens stance on Huawei (Wednesday, May 22, 2019)

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. Against a basket of key rival currencies, the dollar was last a shade lower at 98.014, 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 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

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, 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.