The dollar was down on Tuesday morning in forex exchange as tensions between the U.S. and China rose. These concerns, coupled with worries over the COVID-19 resurgence drove the steepest stocks selloff in a month and a bond rally.
By 10:31 AM ET (2:31 AM GMT), the U.S. Dollar Index edged down 0.11% to 92.942.
Countries including the U.S., Russia and France all set new records for the number of daily COVID-19 cases. According to Johns Hopkins University data, there are over 43.4 million cases globally as of Oct. 27.
Some investors were cautious of the dollar’s prospects ahead of the Nov. 3 U.S. presidential election.
In the remaining week ahead of voting day, candidates Trump and Biden engage in some last-minute campaigning in battleground states. The race is getting tighter although polls are giving Democrat candidate Joe Biden a solid lead over the incumbent president.
Some investors say that a Biden victory, especially if combined with a Democrat Senate, is negative for the dollar. The Democrats are expected to introduce stimulus measures with big price tags to combat the economic effects of the pandemic. This is expected to improve investor sentiment and boost riskier currencies.
Investors are already placing their bets on a Biden victory. Positioning data is showing long bets on the Japanese yen falling for a fourth consecutive week. However, a fall in short bets against the Japanese currency pointed to heightened uncertainty about the outcome of the elections.
Forex news reports USD/JPY pair edged down 0.10% to 104.71.
The USD/CNY pair lowered 0.12% to 6.7038. Tensions between the U.S. and China increased over a potential $2.4 billion sale of U.S. anti-ship missiles to Taiwan. It likely encompasses as many as 100 Harpoon Coastal Defense Systems built by Boeing (NYSE:BA).
Up to 400 land-based missiles are included in the systems. China reacted to the news by slapping sanctions on U.S. companies. Specifically, these firms include Lockheed Martin (NYSE:LMT), Boeing Defense and Raytheon (NYSE:RTN).
On Monday, Chinese Foreign Ministry spokesman Zhao Lijian said it was in order to uphold national interests.
Moreover, the Chinese Communist Party will set the nation’s next five-year plan within the week.
On Antipodean currencies, the AUD/USD pair edged up 0.17% to 0.7134. The NZD/USD pair edged up 0.1% to 0.6690.
Furthermore, the GBP/USD pair inched up 0.10% to 1.3037.