Dollar Down with Increased Risk Appetite Despite U.S.-China Tension

imageForex13 hours ago (May 05, 2020 12:09AM ET)

(C) Reuters.

By Gina Lee – The U.S. dollar was down on Tuesday morning in Asia, with stocks up as some countries reopened their economies the day before.

The U.S. Dollar index that tracks the greenback against a basket of other currencies slipped 0.04% to 99.528 by 12:02 AM ET (5:02 AM GMT).

The USD/JPY pair was down 0.11% to 106.62 as Japan extended its state of emergency to May 31 the day before.

The USD/CNY pair remained steady at 7.0622, with investors’ optimism about China’s reopening in the aftermath of the COVID-19 virus mingling with caution amid increased U.S.-China tensions over the origins of the virus.

“The CNY is that bellwether that everybody’s going to be looking at,” Stephen Innes, chief global market strategist at AxiCorp, told CNBC.

Trump threatened tariffs, or even reneging on U.S. debt obligations, as potential retaliatory measures against China.

As China continues to refute accusations from top U.S. officials that the virus originated in a Wuhan lab, an internal Chinese report warned that Beijing faced a rising wave of worldwide hostility in the wake of COVID-19 that could tip relations with the United States into confrontation.

The AUD/USD pair gained 0.38% to 0.6451 as the Reserve Bank of Australia announces its interest rate policy later in the day.

“The RBA’s post-meeting statement could spark some AUD volatility if it offers further insights into the RBA’s latest economic forecasts,” Commonwealth Bank of Australia (OTC:CMWAY) FX analyst Kim Mundy told CNBC.

The NZD/USD pair also gained 0.34% to 0.6067 as the Antiopdean currencies clawed back their losses from the previous session on the back of investors’ increased risk appetite.

The GBP/USD pair gained 0.16% to 1.2462.

Dollar Down with Increased Risk Appetite Despite U.S.-China Tension

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