FOREX-Dollar in narrow range as US-China tensions simmer, virus cases rise

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Geopolitics and coronavirus pose risks to financial
markets
* Many traders await release of major Chinese economic data
* Currencies move in narrow ranges amid risk aversion

By Stanley White
TOKYO, July 14 (Reuters) - The dollar was hemmed into 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 recent resurgence of
novel coronavirus infections has caused some areas to place new
restrictions on business activity.
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."
The dollar stood at 107.35 yen JPY= on Tuesday in Asia
following a 0.4% gain in the previous session.
The dollar traded at 0.9419 Swiss franc CHF= after eking
out three consecutive sessions of narrow gains.
The euro EUR= was quoted at $1.1346, resting below a
one-month high reached on Monday. The common currency traded at
90.36 pence EURGBP= , holding onto a 0.9% gain from the
previous session.
The United States and China are waging diplomatic battles on
several fronts that have the potential to unsettle financial
markets.
U.S. President Donald Trump's administration plans to soon
scrap a 2013 agreement between U.S. and Chinese auditing
authorities, a senior State Department official told Reuters.
This move could foreshadow a broader crackdown on Chinese
firms listed on U.S. stock markets that are under fire for
sidestepping U.S. disclosure rules.
In addition, the United States has hardened its stance
against China's claims in the South China Sea and is taking
steps to end Hong Kong's special legal status in protest against
Beijing's security law for the former British colony.
The opening of onshore trade in the yuan CNY=CFXS will be
closely scrutinised on Tuesday to see if China's currency can
continue its recent rally.
However, traders are likely to avoid big positions before
the release this week of data on Chinese gross domestic product,
retail sales, industrial output, and exports.
Demand for riskier assets is likely to take a hit after
California, the most populous U.S. state, placed new
restrictions on businesses as coronavirus cases and
hospitalizations soared. Elsewhere in currencies, the Australian dollar AUD=D3 was
little changed at $0.6935. Sentiment for the Aussie has taken a
hit as some Australian states also re-impose coronavirus
restrictions.
The New Zealand dollar NZD=D3 fell slightly to $0.6530.
The Antipodean currencies are considered barometers of risk
because of their close ties to commodities and China's economy.