Dollar slides as economic recovery hopes lift risk appetite

The dollar fell on Tuesday as signs of recovery from the pandemic lifted risk appetite, but the U.S.-China tensions weighed in.

Commodity currencies Australian and New Zealand dollars both gained 0.5%, standing at $0.6571 and $0.6129, respectively.

The Chinese yuan stood at $7.1326 in onshore trade. The Japanese yen traded at 107.80 on the dollar.

The dollar index eased to 99.618.

The growing U.S.-China tensions were factored by trade conflict, China’s handling of the coronavirus outbreak, and the mainland’s move to implement the national security law in Hong Kong. 

White House National Security Adviser Robert O’Brien warned China of possible penalties once Hong Kong’s autonomy is sabotaged. China’s top diplomat Wang Yi said that the U.S. attacks were a “smear”.

Meanwhile, investors are worried that a drawback may happen with the current global policy responses and economic fallout.

Worldwide, restrictions are beginning to ease, raising hopes for faster growth recovery.

The pound gained 0.3% to $1.2218 and the euro rose 0.2% to $1.0918.