KONTAN.CO.ID - TOKYO. The dollar was marginally higher in narrow ranges against most currencies on Tuesday as renewed concerns about diplomatic tension between the United States and China and rising coronavirus cases put a dent in risk appetite.

The euro held onto gains against the greenback and the pound as investors await data on German investor sentiment to help gauge the pace of Europe's recovery from the health crisis.

Currency trading has thinned out as a resurgence of novel coronavirus infections has caused some areas to place new restrictions on business activity.

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Markets now face an additional threat from tit-for-tat retaliation between Washington and Beijing over access to U.S. financial markets, civil liberties in Hong Kong and territorial claims in the South China Sea.

"The focus has shifted to whether or not the next round of coronavirus lockdowns will be large enough to damage economic growth," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities.

"The Hong Kong problem could potentially lead to new trade friction. Negative developments on either front could cause stocks to adjust lower, and drive some safe-haven flows to the dollar and the yen."

Editor: Anna Suci Perwitasari