FOREX-U.S-China tensions boost dollar after weekly loss

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

By Saikat Chatterjee
LONDON, May 25 (Reuters) - The U.S. dollar climbed on Monday
after posting a rare weekly loss as investors flocked to the
shelter of perceived safe-haven currencies on concerns about a
growing standoff between the United States and China over civil
liberties in Hong Kong.
The greenback =USD , which tends to behave like a
safe-haven asset at times of market turmoil and political
uncertainty, rose a fifth of a percent to 99.98 against its
rivals, a one-week high.
The Australian dollar AUD=D3 , by dint of its strong trade
connections with China and the offshore yuan CNH=D3 , led
losers against the U.S. dollar.
More turbulence for U.S.-China relations is prompting some
investors such as UBS Wealth Management to hold a "defensive"
position in Hong Kong. "(The) larger risk for global investors
is what happens if it becomes further enmeshed in broader
relations," said Mark Haefele, its chief investment officer.
China's proposed national security legislation for Hong Kong
could lead to U.S. sanctions and threaten the city's status as a
financial hub, White House National Security Adviser Robert
O'Brien said on Sunday. Hong Kong police fired tear gas and water cannons to
disperse thousands of people who rallied on Sunday to protest
Beijing's national security law. With financial markets in Singapore, Britain and the United
States closed for public holidays on Monday, the weekend
developments hit risk aversion in broader markets in early
trade.
The euro EUR=EBS fell to a one-week low versus the dollar
at $1.0879, down 0.2% on the day.
Sterling GBP=D3 was also on the back foot against both the
dollar and the euro as political pressure grew on British Prime
Minister Boris Johnson to fire senior adviser Dominic Cummings.
Cummings, the architect of the 2016 campaign to leave the EU
and widely considered to be Johnson's most influential
strategist, came under pressure after reports he travelled to
northern England from London during a nationwide lockdown in
March when his wife was ill with COVID-19 symptoms.
The Australian dollar AUD=D3 gave up early gains to trade
0.15% lower at $0.6528 as risk aversion offset optimism about
the country's emergence from coronavirus lockdowns.