* Chinese yuan midpoint fixing weakest in a year
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, July 20 (Reuters) - The dollar held below a one-year high on Friday as the latest comments from U.S. President Donald Trump spurred investors to take profits after a recent rally, while a weakening Chinese yuan capped risk appetite.
In a CNBC interview on Thursday, Trump said a strong dollar put the United States at a disadvantage and he was ready to place tariffs on $500 billion of imported goods from China .
Despite the ratcheting higher of trade tensions, the dollar was poised for a second straight week of gains. It was up more than 5 percent in the past three months on expectations the U.S. central bank will keep raising interest rates in the coming months.
"We don't think the dollar rally is at a risk of ending as the economic momentum is still quite strong, though Trump's comments have given an impetus for profit taking," said Manuel Oliveri, a currency strategist at Credit Agricole in London.
Against a basket of other currencies, the dollar was weaker at 95.10, just below the one-year high of 95.62 it reached in the previous session.
A growing divergence in monetary policy, with the U.S. central bank tightening faster than its peers, has boosted the appeal of U.S. assets. The latest flows data indicate extended inflows into U.S. stocks as the second-quarter earning season got underway.
Bank of America Merrill Lynch data showed inflows of $2.3 billion into U.S. stocks while European stocks recorded a 19th straight week of outflows, according to data from July 19.
Trump's comments on trade yanked the yuan down more than half a percent in London before the Chinese currency stabilized around 6.8162 per dollar. The latest drop has taken its cumulative losses to more than 7 percent since mid-June.
"The Chinese currency really seems like it might be in play again rather than just catching up with a stronger dollar," Rabobank strategists said in a daily note.
The People's Bank of China dropped the midpoint for a seventh straight trading day to 6.7671 per dollar on Friday, 605 pips or 0.9 percent weaker than the previous fix of 6.7066.
Friday's fixing was the lowest since July 14, 2017, and represented the biggest one-day weakening in percentage terms since June 27, 2016.
A soft patch in the dollar prompted some relatively high-yielding currencies to regain some balance. Safe-haven currencies such as the Swiss franc also remain well supported.
The Australian dollar was barely changed at $0.7364, recouping losses after dropping nearly half a percent in early trade.
The euro was broadly steady at $1.1644, hovering above a three-week low of $1.1575 hit on Thursday.
Reporting by Saikat Chatterjee; editing by Larry King