Photo/Illutration A man walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo on May 29. (AP Photo)

The yen rose against major currencies on Friday as caution ahead of U.S. President Donald Trump’s press conference on China’s treatment of Hong Kong triggered safe-haven inflows.

The dollar drifted lower against the euro and the British pound but could quickly reverse course amid growing concern about tense relations between the world’s two biggest economies.

The focus shifts to Trump’s response to China’s passage of a national security law for Hong Kong, which could ignite a diplomatic row between Washington and Beijing.

The greenback was on course for a weekly loss against major currencies as progress in lifting coronavirus lockdowns and stimulus plans in Europe weakened demand for safe havens, but the mood could quickly worsen if Sino-U.S. tensions increase.

“At the moment, hopes for economic recovery are strong, but I expect this to gradually fade to increased concern about the U.S.-China relationship,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.

“When that happens, there will be more risk-off trades, which supports buying of both the dollar and the yen.”

The yen rose 0.5 percent to 107.09 against the dollar.

Japan’s currency crept higher against the euro, the Aussie and the kiwi, supported by safe-haven flows.

The dollar fell to $1.1102 per euro on Friday, close to its lowest since March 30. The euro drew support from data showing a smaller-than-expected fall in German retail sales.

The common currency was headed for its second weekly gain against the greenback as the EU’s announcement of a 750-billion-euro coronavirus recovery fund fueled optimism about the euro-zone economy.

The dollar last bought 0.9627 Swiss francs, on course for a 0.9 percent weekly decline.

The Australian dollar fetched $0.6656, close to its highest in more than two months, while the New Zealand dollar traded at $0.6214, near its strongest since March.

The Aussie and the kiwi were on course for weekly gains as investors cheered the gradual reopening of business activity in the two antipodean economies.

China’s parliament on Thursday approved national security legislation for Hong Kong that Western countries fear could erode the city’s freedoms.

Trump, who has vowed a tough U.S. response, told reporters he would hold a news conference on China on Friday.

The risk is Hong Kong could lose some of the special privileges in enjoys under U.S. law, which would threaten its status as a global financial hub.

The potential standoff has stirred memories of last year’s bruising Sino-U.S. trade war, which weighed on the global economy and roiled financial markets.

In the onshore market, the yuan held steady at 7.1463 against the dollar. Offshore, the yuan traded at 7.1641, not far from a record low of 7.1966 reached on Thursday.

This week the euro led the charge against a weakened dollar after EU policymakers unveiled fiscal stimulus combining grants and loans intended to ease dissent among euro-zone countries.

Analysts say the euro may struggle to extend its gains because fiscally conservative member states may still push to alter the plan.

Elsewhere, the pound rose 0.27 percent to $1.2350. Sterling was on course for its second weekly gain, supported by broad selling in the dollar this week.

However, sentiment for the pound has been somewhat negative due to calls for the resignation of an influential aide to British Prime Minister Boris Johnson, lack of progress in EU trade talks and speculation about negative interest rates.

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