FOREX-U.S.-China tensions lift dollar 0.3%

* U.S.-China tensions lift dollar
* Oil price falls hit commodity currencies
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

LONDON, May 22 (Reuters) - The dollar rose on Friday in
overnight trading and extended its gains in early London
trading, after U.S.-China tensions boosted demand for safe-haven
currencies.
U.S. President Donald Trump said that Washington would react
"very strongly" to new Chinese legislation on Hong Kong, which
could lead to new pro-democracy protests. Sino-American relations have worsened during the coronavirus
pandemic. The U.S. has ramped up its criticism of China, blaming
it for the spread of the virus, which originated in Wuhan.
Last week, the U.S. government moved to block global chip
supplies to blacklisted telecoms equipment maker Huawei
Technologies HWT.UL . The U.S. Senate also passed legislation
that could prevent some Chinese companies from listing their
shares on U.S. exchanges. "As "trade conflict" also means "USD strength" (at least
that was the market interpretation so far) the risk-on related
USD weakness seen over the past days comes to a (preliminary)
end," wrote Ulrich Leuchtmann, Commerzbank's head of FX and
commodity research.
"That means for EUR-USD that the excursion above the
1.10-mark was short-lived and will not be repeated for now," he
added.
Against a basket of comparable currencies =USD , the dollar
was last at 99.7, up 0.3% since New York's close. After two
consecutive weeks of gains, the dollar looks set to end this
week down around 1%.
The euro was down around 0.3% against the dollar, at $1.092,
having hit a three-week high of $1.1008 on Thursday EUR=EBS .
The Japanese yen was up around 0.2% against the dollar, at
107.36 JPY=EBS .
The offshore Chinese yuan hit a two-and-a-half-week low of
7.151 in early London trading, last down around 0.2% on the day
CNH=EBS .
Commodity currencies fell as investors sought safety, with
the riskier Australian dollar down 0.7% AUD=D3 and the New
Zealand dollar down 0.3% NZD=D3 , against the U.S. dollar.
Oil prices fell on Friday after China failed to set an
economic growth target for 2020, sparking concern that the
coronavirus pandemic will cap fuel demand in the world's
second-largest oil user. "The fall in the oil price weighed on NOK overnight, making
it the worst performing European currency (even underperforming
RUB)," wrote ING strategists in a note to clients.
But, they added, the fall in Brent oil is a correction
rather than the start of a new trend, and the Norges Bank is
finished cutting interest rates, so the outlook is positive for
the Norwegian crown for the second half of 2020.
The Norwegian crown was last down around 1% against both the
U.S. dollar and euro NOK=D3 EURNOK=D3 , its weakest in five
days.