* China’s Global Times marks retaliation for U.S. Huawei move
* Pound 7wk low on Brexit concerns, speech or negative prices
* Graphics: World Currency Rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, May 18 (Reuters) – The dollar held its place Monday as worries over global tensions with China overshadowed improved sentiment from easing the shutdown of coronavirus while talk of negative interest rates pushed the pound to a nearly two-month low.
When Italy announced plans to lift curbs next month, and parts of the United States came out of lockdowns in a boost to stocks, the growing tension with China in Europe, the US and Australia has forced currency traders to raise their guard.
The dollar was a touch firmer against the Japanese yen, which was close by, at 107.25 yen per share. Dollar as Japan slid into recession for the first time since 2015.
Greenback was stable in most other Asian currencies after gains last week and flat against a basket of currencies of 100,380. That kept the New Zealand dollar below 60 cents to $ 0.5934, just above a three-week low.
The Trump administration’s move to block chip supplies for Huawei Technologies is the latest Sino-U.S. flashpoint, with markets on edge for a response after China’s newspaper in the Global Times highlighted possible retaliation.
Australia has also entered into trade issues while the head of the EU’s largest political alliance is pushing for a temporary ban on Chinese takeover of struggling companies.
The Australian dollar was fired a little after the Australian Financial Review newspaper reported conciliation posts from China’s foreign ministry, but remained firmly below 65 cents at $ 0.625.
“At the forefront of market participants’ minds is that we see these (China) tensions just rallying higher, so there has been support for the US dollar on the back of it,” said Commonwealth Bank of Australia FX analyst Kim Mundy.
“Also, comments by Fed officials last week about the risk to the US economy are skewed to the downside, risks surrounding another wave of infection, I think that will continue to support the US dollar this week as well.”
U.S. Retail sales plunged 21.6% year-on-year last month and 20 million Americans lost their jobs.
Federal Reserve chairman Jerome Powell said it will be a long road to recovery, even in the best of circumstances, in a television interview on Sunday.
“In order for the economy to fully recover, people need to be fully confident, and it may have to wait for the arrival of a vaccine,” he said.
The pound fell 0.1% to $ 1,2091, the lowest since the end of March, following a week of stalemate with the EU during a post-Brexit trade deal, and the Bank of England’s top economist considered negative interest rates in a Saturday newspaper interview.
“The economy is weaker than a year ago, and we are now at the effective lower limit, so in that sense it’s something we have to look at – look at – with some greater momentum,” he told the Telegraph. “How could we not be?”
The pound also sat at a seven-week low of 89.45 pence per pound. Euro and a four-month made at 53.14 pence per Aussie. (Reporting by Tom Westbrook Editing by Shri Navaratnam)