FOREX-Yen, franc firm as trade tensions fester; pound sinks

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, May 22 (Reuters) - The Japanese yen and the Swiss
franc firmed on Wednesday as risk appetite remained weak in the
backdrop of festering trade tensions between the United States
and China.
While risky assets heaved a sigh of relief overnight after
the United States eased trade restrictions on Chinese
telecommunications equipment maker Huawei Technologies, the lack
of a significant breakthrough has kept investors on edge.
"We are still skeptical over a long-lasting recovery," said
Charalambos Pissouros, a senior markets analyst at JFD group.
"Before we get confident on that front, we would like to see
concrete signs that both the US and China are truly willing find
common ground."
Against a basket of key rival currencies, the dollar was
largely steady at 98.031 .DXY , having brushed a 3-1/2-week
high of 98.134 overnight. The index has risen 1.9% this year.
The Japanese yen JPY= and the Swiss franc CHF= remained
firm against the dollar with both currencies set to gain nearly
one percent so far this month against the greenback signaling
investors were broadly dialing back on risky assets.
However, MUFG Bank's chief currency strategist Minori Uchida
said he expected demand for the U.S. currency to remain strong
on a need for dollar funding among emerging markets and on
investor cautiousness due to the Sino-U.S. trade dispute.
"Even if yields fall, that's not likely to put a big dent in
the dollar's rise," he said.
Sterling was the only notable loser in the early European
session with the British currency GBP=D3 falling 0.3% to a
fresh four-month low against the dollar at $1.2663. GBP/
Political uncertainty in Britain deepened as Prime Minister
Theresa May's final attempt to seal a Brexit deal failed to win
over either opposition lawmakers or many in her own party.
Elsewhere in the foreign exchange market, the euro EUR=EBS
was steady at $1.1162 before a speech by European Central Bank
chief Mario Draghi in Frankfurt.