* Euro, sterling, Scandi currencies fall vs greenback
* Biggest move in Chinese yuan vs dollar
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Olga Cotaga
LONDON, May 4 (Reuters) - The U.S. dollar surged against
most major currencies on Monday amid fears that last year's
U.S.-China dispute will be re-ignited, this time over the novel
coronavirus.
U.S. President Donald Trump and Secretary of State Mike
Pompeo have pinned the blame for the pandemic on China, where
the new coronavirus outbreak is believed to have originated.
The latest salvo came from Pompeo on Sunday, who said there
was "a significant amount of evidence" that the virus emerged
from a laboratory in the central Chinese city of Wuhan.
"This morning's session is being dominated by risk-averse
trading as investors weigh the negative consequences to global
growth from another escalation in U.S.-China tensions," said
Simon Harvey, currency analyst at broker Monex Europe.
"The headlines of further tariffs and supply-chain
disruptions come at a time where global growth expectations are
already fragile, causing currencies such as sterling and the
euro to trade on the back foot this morning despite exit
measures set to be announced or implemented in their respective
economies," Harvey said.
The euro was last down 0.4% at $1.0932 EUR=EBS . Sterling
was also down by 0.4% to $1.2442 GBP=D3 .
The dollar was also rising against Scandinavian currencies,
which are so vulnerable to global trade risks. The Swedish crown
was last down 0.6% at 9.8995 versus the dollar SEK=D3 and the
Norwegian crown was falling by 0.8% at 10.3975 NOK=D3 .
However, the biggest move in the currency markets was the
Chinese yuan, which fell to a six-week low of 7.1555 against the
dollar in the offshore market CNH=EBS . It was last flat at
7.1380, but if falls again, the next levels to watch would be
the mid-March low of 7.1651 and early-September low of 7.1975.
Analysts were debating how the United States might attack
China again - with more trade tariffs or even cancelling the
payments on the U.S. Treasurys that China owns - but they all
agreed the dollar/yuan cross would see higher volatility.
"A re-escalation in U.S.-China trade tensions has the
potential to bring an end to the relative stability in USD/CNY,"
said Lee Hardman, a forex strategist at MUFG.
The moves extended a dour start for May, which began with
Friday's bleak U.S. data and the threat of a fresh trade-war
between the world's two biggest economies.
Pompeo did not provide evidence, or dispute a U.S.
intelligence conclusion that the virus was not man-made. But the
comments double down on Washington's pressure on China as U.S.
deaths and economic damage mount.
The ultimate safe-haven currency - the Japanese yen - was
the only major currency that rose against the U.S. dollar, last
trading up 0.2% at 106.71 JPY=EBS .
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Chinese yuan falls to lowest in 6 weeks vs dollar IMAGE https://tmsnrt.rs/3dcQovL
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