By Gina Lee
Investing.com – The dollar was up on Tuesday morning in Asia, but gains were limited by the U.S. Congress’ lack of progress towards reaching consensus on its latest stimulus measures as well as incessantly rising numbers of COVID-19 cases globally.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.07% to 93.555 by 10 AM ET (3 AM GMT).
Even though the dollar saw limited gains for a second consecutive day after enduring its worst month in ten years in July, some investors were skeptical over whether the dollar could hold onto its gains.
“At this juncture, the question markets have to decide is: is this just a correction or is the dollar making a proper come-back?” ANZ Bank analysts said in a note.
“Better manufacturing and strong equity markets are decent supports. But going against that we have virus cases still rising rapidly, abundant liquidity and rebounding commodity prices,” they warned.
Although the Institute for Supply Management’s U.S. manufacturing purchasing managers index reported a better-than-expected expansion, the employment index remained at contractionary levels.
“The recovery cannot accelerate with the virus still not under control in large segments of the global economy,” Deutsche Bank’s chief international strategist Alan Ruskin told Reuters.
“We expect much more sensitivity to the August data, now that ‘the easy part’ of the bounce back from lockdowns is done.”
The USD/JPY pair gained 0.21% to 106.17.
The AUD/USD pair was down 0.04% to 0.7120 With Melbourne extending and tightening lockdown measures , including a curfew, over the weekend, hopes of a more upbeat outlook from the Reserve Bank of Australia (RBA) as it announces its policy decision later in the day have been dashed.
“There has been some discussion about the RBA cutting rates given the shutdowns in Melbourne, but this is crazy talk,” said Chris Weston, head of research at Pepperstone.
“We may get some increased level of concern... but the support needed right now is not more easing of monetary policy, but fiscal,” he added.
The NZD/USD pair was up 0.05% to 0.6613. The USD/CNY pair also saw a modest gain of 0.03% to 6.9818. U.S.-China tensions continue to simmer, with U.S. President Donald Trump ordering Chinese company ByteDance to either sell subsidiary TikTok’s U.S. operations to an American company or close its U.S. operations by September 15.
The GBP/USD pair inched up 0.02% to 1.3075. The Bank of England will hand down its rate decision on Thursday.