By Gina Lee
Investing.com – The dollar was down on Tuesday morning in Asia, with investors turning to the safe-haven asset as COVID-19 cases continue their relentless climb and U.S.-China tensions simmer.
The number of COVID-19 cases globally passed the 13 million mark as of July 14, according to Johns Hopkins University data. The dollar got an additional boost as investor hopes of a quick economic recovery diminished further, with some countries re-imposing lockdown measures to curb the spread of the virus.
“The focus has shifted to whether or not the next round of coronavirus lockdowns will be large enough to damage economic growth,” Junichi Ishikawa, senior foreign exchange strategist at IG Securities, told Reuters.
Adding to the list of recent differences between the U.S. and China over trade and Hong Kong’s national security laws, U.S. Secretary of State Michael Pompeo issued a statement on Monday rejecting Chinese claims in the South China Sea. Pompeo’s statement came on the back of China’s recent military exercises in the contested waters around the South China Sea’s Paracel Islands.
China hit back on Tuesday morning, rejecting the U.S. statement and calling Pompeo’s accusations of China bullying its neighbors “completely unjustified”.
The two other issues also threaten to sour relations between the two countries.
“The Hong Kong problem could potentially lead to new trade friction. Negative developments on either front could cause stocks to adjust lower and drive some safe-haven flows to the dollar and the yen,” Ishikawa added.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.03% to 96.537 by 9:36 AM ET (2:36 AM GMT).
The USD/JPY pair was down 0.06% to 107.19 while the USD/CNY pair jumped 0.20% to 7.0099.
The AUD/USD pair was up 0.04% to 0.6942, reversing its earlier losses. The AUD has taken a hit as some Australian states joined the city of Melbourne in re-imposing lockdown measures. Meanwhile, the NZD/USD pair slid 0.08% to 0.6534.
The GBP/USD pair was down 0.01% to 1.2551.