* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Elizabeth Howcroft
Nov 20 (Reuters) - The dollar rose on Wednesday and
trade-exposed currencies fell after the U.S. president
threatened a trade war escalation and China condemned a U.S.
senate measure backing pro-democracy protesters in Hong Kong.
China's yuan slipped to a new two-week low in overnight
trading CNH=D3 after U.S. President Donald Trump threatened to
raise new tariffs on Chinese imports if ongoing trade
negotiations fail. China condemned the U.S. legislation aimed at protecting
human rights in Hong Kong, saying that the U.S. should stop
interfering. After four days of falling, the dollar was up 0.1% against
both the euro EUR=EBS and a basket of currencies. .DXY
"Today the main focus is the trade talks between China and
the U.S. and we are seeing risk aversion," said Piotr Matys,
currency strategist at Rabobank.
Matys said that the U.S. senate's bill in support of Hong
Kong could complicate progress towards a preliminary trade deal.
Markets had hoped that a partial trade deal to end the
16-month U.S.-China trade war could be signed at a summit in
Chile, which was scheduled for mid-November. The summit was
cancelled, leaving the outlook for a deal unclear.
Adam Cole, chief currency strategist at RBC Capital Markets
said that a preliminary "phase one" trade deal could be reached
by the end of the year.
"The prospect of a broader more all-encompassing deal will
drag on well into next year," he added.
"The market is worrying (about) this sort of exogenous shock
to the process by the build-up of tension in Hong Kong - I
ultimately doubt that either side will allow that to delay the
process," Cole said.
The Canadian dollar fell against the U.S. dollar to its
lowest since Oct. 11 after a speech by the Bank of Canada's
senior deputy governor boosted the perceived likelihood of a
rate cut. CAD=D3 Trade-exposed currencies took a hit from the worsening
U.S.-China relations. The Australian and New Zealand dollars
were both down 0.4% versus the U.S. dollar AUD=D3 , NZD=D3 .
The Norwegian crown was down 0.9% versus the dollar NOK=D3
and 0.7% versus the euro EURNOK=D3 .
The Swedish crown tracked these losses, but to a lesser
extent, down 0.4% versus the dollar SEK=D3 and 0.7% versus the
euro EURSEK=D3 .
Demand for safe-have currencies was relatively unchanged,
with the Japanese yen up around 0.1% against the dollar
JPY=EBS and the Swiss franc flat around 0.9905 CHF=EBS .
Minutes from the U.S. federal reserve's FOMC meeting in
October are due at 19.00 GMT. Analysts expect little impact.