* Appetite for safe-haven currencies recedes
* Dollar maintains gains as euro, Norwegian crown wilt
* China's central bank fixes yuan lower than expected
* Graphic: World FX rates in 2019
(Adds context, quotes, chart, updates prices)
By Olga Cotaga
LONDON, Aug 16 (Reuters) - The dollar rallied on Friday, hitting a
two-week high against the euro and reaching its strongest in more than
17 years against the Norwegian crown as expectations for lower
interest rates weighed on the European currencies.
The euro fell to $1.1073 , within a whisker of the two-year low
it reached at the beginning of August. The biggest move however was in
Norway's crown, which dropped to more than a 17-year low of 9.0390
against the greenback in early Friday trading .
Better-than-expected retail sales data in the United States on
Thursday also encouraged buying of the dollar.
The crown extended its selloff after the Norges bank said on
Thursday its plan for an interest rate rise this year was now more
Norway's currency has been falling fast since June as the price of
oil - its principal export - has tumbled and as fears of weaker global
growth and tougher trade relations weighed down on the open Norwegian
economy. Trade tensions between the United States and China
intensified last week after President Donald Trump warned he will be
raising tariffs on additional Chinese imports this year.
The crown later rebounded and was last up 0.3% at 8.991.
Against the euro the crown rose 0.6% to 9.9655 . Earlier this month
the crown dropped to a near 11-year low versus the euro.
"There's no good reason to be super bullish on the Norwegian
crown," said Lauri Halikka, a fixed income and foreign exchange
strategist at Nordic bank SEB.
The euro fell on Friday due to growing expectations of an interest
rate cut by the European Central Bank after Governing Council member
Olli Rehn suggested on Thursday that the central bank could restart
its quantitaive easing programme and was open to extending it into
"For the markets this came as a surprise," said Ulrich
Leuchtmann, an analyst at Commerzbank. However, the euro is unlikely
to sink much further on this reason, Leuchtmann said.
"ECB-induced euro weakness will be relatively limited
(because) if Europe's common currency would weaken too much, the U.S.
government's pressure on the Fed (to weaken the dollar) could intensify."
Measured against a basket of six major currencies , the dollar
was higher by 0.1% at 98.266. It has recovered by 1.3% from its
three-week low on Aug. 9.
Data showing U.S. consumers kept spending in July came as a relief
after the U.S. Treasury yield curve inverted this week, which
historically has preceded U.S. recessions .
The inversion stoked worries about the impact of the Sino-U.S.
trade war. The curve steepened a little on Friday
China on Thursday said it would retaliate for the latest U.S.
tariffs on $300 billion of Chinese goods, but Trump said any pact
would have to be on America's terms, suggesting a resolution to the
trade war remains elusive.
China's offshore yuan, whose plunge past 7 to the dollar last week
sent shivers through financial markets, was weaker on Friday at 7.0530
. The People's Bank of China fixed the onshore yuan currency at 7.0312
on Friday, compared with market expectations at 7.0307, according to
analysts at Commerzbank.
Sterling was up 0.7% at $1.2160, after reaching an eight-day
high of $1.2169 earlier. Against the euro, the pound reached two-week
high of 91.94 pence .
Strong correlation between oil price and Norwegian crown since June
(Reporting by Olga Cotaga Editing by Mark Heinrich)