By Gina Lee
Investing.com – The dollar was up on Tuesday morning in Asia, clinging on to gains from the previous session as COIVD-19 fears and worries over the U.S. Congress’ stimulus impasse drove a heavy selloff in almost all other assets.
The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, inched up 0.04% to 93.602 by 9:48 PM ET (1:48 AM GMT).
“The equity selloff gathered quite dramatic momentum during the European day and the risk-averse characteristics of the U.S. dollar really came to the fore,” National Australia Bank (OTC:NABZY) head of FX Ray Attrill told Reuters.
Financials bore the brunt of the selloff, after HSBC (HK:0005) and Standard Chartered (HK:2888) were among 90 banks named in a leak of more than 2,100 suspicious activity reports (SARs) for moving over $2 trillion of reportedly illicit funds between 1995 and 2017, despite concerns over the funds’ origins.
A fresh outbreak of COVID-19 in Europe, with the looming spectre of fresh lockdowns, and jitters over the continuing impasse in the U.S. Congress over the latest stimulus measures as the U.S. presidential election draws nearer, also saw investors turning to the greenback.
U.S. President Donald Trump said during a political rally on Monday that his questions about adjusting the dollar’s exchange rate to counter what he referred to as Chinese currency manipulation, were rebuffed.
The USD/JPY pair edged down 0.12% to 104.52, after the safe-haven yen reached a six-month high during Monday’s Asian session.
The yen’s losses continued to bewilder investors.
“It’s not uncommon with sudden yen moves that it’s driven by domestic asset managers coming in to buy foreign assets at the lows, and buying dollars to pay for them,” Nomura executive Stuart Oakley told Reuters.
“But I don’t really know what is behind this particular bounce … my own personal view is this is all just a correction within a major trend for stronger asset prices in the U.S. and a weaker dollar, with the uber-easy U.S. monetary policy the overwhelming driver of everything,” Oakley added.
Japanese markets were closed for a holiday.
The AUD/USD pair edged down 0.17% to 0.7210, while the NZD/USD pair inched up 0.02% to 0.6667 ahead of the Reserve Bank of New Zealand’s rate decision on Wednesday.
The USD/CNY pair was down 0.23% to 6.7885.
The GBP/USD pair inched down 0.04% to 1.2809, with U.K. Prime Minister Boris Johnson due to announce new restrictions on bars and restaurants later in the day, aiming to curb the growing number of COVID-19 cases in the country. The U.K.’s Chief Scientific Adviser Patrick Vallance warned on Monday that without urgent action, the current infection rate could lead up to 50,000 new cases a day by mid-October.
Johnson will also encourage a return to working from home on Tuesday.