FOREX-Dollar holds gains as U.S.-China frictions rattle Asian FX

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* U.S.-China standoff undermines sentiment
* Dollar supported as a safe-haven
* Yuan steady after Beijing unveils stimulus
* New Zealand ponders helicopter money

By Stanley White
TOKYO, May 22 (Reuters) - The dollar held gains against
major peers on Friday as worries about renewed diplomatic
tensions between the United States and China supported
safe-haven demand for the greenback.
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.
The fresh geopolitical strains have rattled Asian currencies
such as China's yuan and the Australian and New Zealand dollar.
"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."
While the new frictions added some pressures to the yuan,
the Chinese currency also found some support after policymakers
in Beijing unveiled new stimulus measures. The dollar traded at $1.0948 per euro EUR=EBS in Asia on
Friday, following a 0.3% increase in the previous session.
The dollar bought 0.9710 Swiss franc CHF=EBS after posting
its biggest gain in more than two weeks on Thursday.
Sterling GBP=D3 held steady at $1.2228 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.
The Hong Kong dollar HKD=D3 was little changed on Friday,
bumping against the top end of its narrow 7.75-7.85 band against
the greenback. Shares in Hong Kong .HSI slid, highlighting
investors' concerns.
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 tension has stirred memories of last year's drawn-out
trade war between the two economic superpowers, which roiled
global financial markets.
Onshore, the yuan CNY=CFXS held steady at 7.1181 per
dollar after a 0.3% dip on Thursday.
Chinese Premier Li Keqiang pledged higher infrastructure
spending and other measures to support the economy at the
National People's Congress on Friday. China did not issue a growth target for 2020, the first time
since it began publishing such goals in 1990, as the world's
second-largest economy reels from the coronavirus.
The antipodean currencies nursed losses as risk sentiment
took a blow.
The Australian dollar AUD=D3 fell 0.24% to $0.6553. Across
the Tasman Sea, the New Zealand dollar NZD=D3 eased slightly
to $0.6114.
New Zealand is considering distributing cash directly to
households to help the economy recover from the coronavirus
pandemic, the country's finance minister said on Friday.
The idea of direct cash transfers to households, sometimes
called helicopter money, is drawing attention as the pandemic
inflicts the worst blow to the global economy since the Great
Depression in the 1930s.
Elsewhere, the yen JPY=EBS was little changed at 107.57
per dollar after the Bank of Japan decided the details of a
lending scheme for small companies hurt by the pandemic at an
emergency meeting on Friday.