Dollar Down Over Increased Investor Caution as U.S.-China Tensions Rise

By Gina Lee

Investing.com – The dollar was down on Thursday morning in Asia, with tensions between the U.S. and China outweighing optimism over a global economic recovery from COVID-19.

The two countries’ latest battle is over national security laws proposed for Hong Kong and Macau, with U.S. Secretary of State Mike Pompeo firing the latest shot on Wednesday after he said that Hong Kong was no longer autonomous from China.

The laws were “only the latest in a series of actions that fundamentally undermine” the city’s autonomy and freedoms, he said.

Pompeo’s comments not only jeopardized the city’s special trade status with the U.S, but its reputation as a financial hub as well.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.16% to 98.900 by 11:26 AM ET (4:26 GMT) with investor caution continuing to impact even the safe-haven asset.

The USD/JPY pair slid 0.10% to 107.82.

The USD/CNY pair was down 0.01% to 7.1674. The yuan hit a record low of 7.1966 per dollar in offshore trade during the previous session.

The AUD/USD pair lost 0.05% to 0.6616 while the NZD/USD pair gained 0.10% to 0.6185.

“Overall, the macro story is hard to ignore, and things are picking up,” Jason Wong, senior market strategist at BNZ, told CNBC.

“But Down Under, here, obviously China is an important part of what drives markets. Markets are awaiting China’s response (on Hong Kong) and we’re caught in the middle a little bit.”

The GBP/USD pair was up 0.12% to 1.2264.