FOREX-Dollar holds gains amid fresh U.S.-China tensions

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* U.S.-China standoff undermines sentiment
* Dollar supported as a safe-haven
* Yuan in focus before National People's Congress

By Stanley White
TOKYO, May 22 (Reuters) - The dollar held gains against
major currencies on Friday as worries about renewed diplomatic
tensions between the United States and China supported
safe-haven demand for the greenback.
The yuan nursed losses in offshore trade, but further
declines may be limited in the local session on Friday as
Chinese officials are expected to unveil new economic stimulus
measures.
Sino-U.S. relations have soured yet again over a broad range
of issues, including China's treatment of the former British
colony of Hong Kong and its response to the coronavirus
pandemic, which is causing risk aversion to spread.
"There have been problems between the United States and
China for quite a while now," said Yukio Ishizuki, FX strategist
at Daiwa Securities in Tokyo.
"Some very short-term players are changing positions from
one day to the next, which makes it difficult to see the trend,
but overall the dollar looks to be supported."
The dollar traded at $1.0950 per euro EUR=EBS in Asia on
Friday, following a 0.3% increase in the previous session.
The dollar bought 0.9705 Swiss franc CHF=EBS after posting
its biggest gain in more than two weeks on Thursday.
Sterling GBP=D3 held steady at $1.2227 before data later
on Friday expected to show a plunge in British retail sales.
China is set to impose new national security legislation on
Hong Kong after last year's pro-democracy unrest, a Chinese
official said on Thursday. U.S. President Donald Trump has warned that Washington would
react "very strongly" to the legislation.
There is a risk that Hong Kong could lose some of its
favourable U.S. trading terms that have helped it maintain its
position as a global financial centre.
Washington and Beijing are also at loggerheads over Chinese
companies' access to advanced technology and criticism of
Beijing's response after the novel coronavirus emerged late last
year in the central Chinese province of Hubei.
The friction stirs memories of last year's drawn-out trade
war between the United States and China, which roiled global
financial markets.
Offshore, the yuan CNH=D3 stood at 7.1314 per dollar on
Friday after falling in the previous session by the most in
three weeks.
The focus is on whether the yuan CNY=CFXS extends declines
in onshore trade today.
Chinese Premier Li Keqiang is expected to unveil stimulus
measures when the National People's Congress starts on Friday to
spur its economy, which has been battered by the coronavirus.
Elsewhere, the yen JPY=EBS held steady at 107.63 per
dollar. The Bank of Japan will hold an emergency meeting later
on Friday to decide the details of a lending scheme for small
companies hurt by the pandemic. The antipodean currencies nursed losses as risk sentiment
took a blow.
The Australian dollar AUD=D3 changed hands at $0.6568
after a 0.4% decline on Thursday, while the New Zealand dollar
NZD=D3 last stood at $0.6123.