* Dollar rises vs most major currencies
* Offshore yuan down despite China data boost
* Sterling withers as UK GDP disappoints
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, July 14 - The U.S. dollar edged up on Tuesday as
diplomatic tensions between the United States and China and
rising coronavirus cases knocked investor confidence, although
moves in currency markets were small in a quiet session.
While stock markets fell as investors turned cautious, the
safe-haven yen was little changed and the Swiss franc - another
currency traders buy in times of uncertainty - rose only
slightly versus the euro, suggesting limited concern among FX
investors.
A resurgence of novel coronavirus infections has caused some
areas to place new restrictions on business activity, injecting
some caution into the multi-month stock market rally that is
betting on a rapid economic recovery. 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.
"U.S.-China tensions about the situation in the South China
Sea helped U.S. dollar and weighed on cyclical currencies
overnight, with the trade weighted dollar remaining firmly in
the range of recent weeks," ING analysts said.
However, they said progress in the European Union's efforts
to agree a recovery fund package this week would support the
euro and limit the dollar's rise.
Against a basket of currencies the dollar index was last up
0.1% at 96.662 =USD , keeping it firmly with a tight range it
has traded in since May.
The euro was down 0.1% against the dollar at $1.1331
EUR=EBS .
Currencies heavily exposed to global trade sentiment were
down, but not by much. The Australian dollar lost 0.1% to
$0.6930 AUD=D3 , while China's offshore yuan slipped to 7.0185
yuan per dollar CNH=EBS .
The yuan was little moved by data showing Chinese imports in
June rose for the first time since the coronavirus panic
paralysed the economy, as investors focused on tensions with
Washington. "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," said Junichi Ishikawa, senior foreign
exchange strategist at IG Securities.
In a busy day for data, Germany's ZEW economic sentiment
indicator is due at 0900 GMT. U.S. inflation numbers for June
will follow at 1230 GMT.
The British pound fell after the economy rebounded in May at
a much slower pace than expected, calling into question the
V-shaped recovery many economists have been forecasting.
Sterling was last down 0.3% at $1.2513 GBP=D3 .
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U.S. dollar index https://tmsnrt.rs/3fDHRU8
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