FOREX-New U.S.-China tensions boost dollar; euro, offshore yuan fall

* U.S.-China tensions drive risk-off move
* Oil price fall hits commodity currencies

(New throughout, updates prices, market activity, comments to
U.S. market open; new byline, changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, May 22 (Reuters) - The dollar climbed against a
basket of currencies for a second straight day on Friday helped
by safe-haven demand as Beijing moved to impose a new security
law on Hong Kong after last year's pro-democracy unrest, further
straining fast-deteriorating U.S.-China ties.
China on Friday unveiled details about its plan to impose a
national security law in Hong Kong that could see mainland
intelligence agencies set up bases in the global financial hub,
raising fears of more pro-democracy protests. Reports of the law on Thursday drew fire from President
Donald Trump, sapping investors' appetite for riskier assets and
drove the euro, offshore yuan and commodity currencies lower on
Friday.
Sino-American relations have worsened during the coronavirus
pandemic. The United States has ramped up its criticism of
China, blaming it for the spread of the virus, which originated
in the city of Wuhan in central China.
"It's definitely a risk-off kind of day," said Minh Trang,
senior FX trader at Silicon Valley Bank in Santa Clara,
California.
"These types of headlines certainly give a little bit of a
jolt to the overall market and you are seeing the result of that
today," he said.
The U.S. Dollar Currency Index =USD , which measures the
greenback's strength against six other major currencies, was up
0.4% at 99.814. For the week, the index was down about 0.5%.
The offshore Chinese yuan hit a two-month low of 7.1644.
The onshore yuan hit eight-month lows. risk-sensitive Australian dollar was 0.7% lower against
the greenback while the New Zealand dollar NZD=D3 fell 0.6%.
Sterling fell 0.3% against the dollar as fresh data showed
UK retail sales dropped by a record 18% as the coronavirus
crisis hammered the economy. A drop in oil prices on Friday on rising U.S.-China tensions
and doubts about the pace of demand recovery from the
coronavirus crisis hurt the currencies of oil-producing nations.
The Canadian dollar weakened about 0.5% against its U.S.
counterpart as oil prices fell and Canadian data showed a record
decline in retail sales, with the loonie giving back some of
this week's rally. CAD=D3
The Norwegian crown fell about 0.8% against the U.S. dollar
NOK=D3 .

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GRAPHIC: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
GRAPHIC: Yuan hit by Sino-U.S. tensions https://tmsnrt.rs/3e7VzxB
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