Dollar Retreats After Escalating U.S.-China Tensions

© Reuters.  © Reuters.

By Gina Lee – The dollar was down on Monday morning in Asia, giving up its earlier gains after protests in Hong Kong on Sunday escalated U.S.-China tensions.

Thousands took to the streets in the Special Administrative Region after China formally tabled national security laws for both Hong Kong and Macau as the National People’s Congress opened on Monday.

U.S.-China tensions escalated after Chinese Foreign Minister Wang Yi said overnight that the U.S. risked “a new cold war” with China after U.S. President Donald Trump threatened strong action should the law be enacted.

The U.S. Commerce Department added 33 Chinese companies and institutions to a blacklist on Friday, and two U.S. Senators proposed sanctions on entities enforcing the law.

The that tracks the greenback against a basket of other currencies was down 0.02% to 99.868 by 11:37 PM ET (4:37 AM GMT) with investor risk appetite soured by the rising tensions.

The pair gained 0.16% to 7.1384.

“The biggest concern is the tension between the United States and China,” Takuya Kanda, general manager of research at Research Institute, told Reuters.

“Things were already bad, and it is likely to get worse because of the Hong Kong security law. This supports risk-off trades, which is positive for the dollar and the yen.”

The pair was up 0.11% to 107.72.

The pair lost 0.05% to 0.6532 even with Australia looking to remove most lockdown measures by July. Children returned to school on Monday and their parents were freed up to return to work.

The pair was down 0.21% to 0.6094.

Meanwhile, the pair gained 0.12% to 1.2178 even after U.K Prime Minister Boris Johnson expressed supports for his senior adviser Dominic Cummings on Sunday amid calls from within Johnson’s Conservative Party for Cummings to resign.

Cummings travelled from London to northern England during the nationwide lockdown in March even after his wife exhibited COVID-19 virus symptoms. He is widely viewed as Johnson’s most influential strategist as the architect of 2016’s Brexit campaign.

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