LONDON - The dollar rose towards three-month highs versus major counterparts on Tuesday as coronavirus outbreaks threatened to snuff out global economic recovery with the Australian dollar and the British pound leading losses.
Australia is battling small but fast-growing outbreaks with snap lockdowns in several cities while the Red Cross said Indonesia's COVID-19 surge is taking the Southeast nation to the edge of a "catastrophe".
"Market sentiment is not that cheery at the start of this week with news of rising COVID cases, new lockdown measures and fresh travel restrictions pouring cold water on global markets," said Ipek Ozkardeskaya, a senior analyst at Swissquote.
Against a basket of its rivals, the greenback rose 0.14 percent to 92.003, not far from three-month highs of 90.68 hit this month.
The dollar and yen benefited from some safe-haven demand as the more contagious Delta coronavirus strain spread in Asia and elsewhere, stoking fears of further lockdowns.
The euro declined 0.1 percent to $1.1911, edging back toward the 2-1/2-month low of $1.8470 touched on June 18.
"The market had been positioned long of the single currency on optimism regarding the vaccine catch-up trade in the region (but) forecasts that the Delta variant of COVID could spread through Europe (in) the summer months could now be undermining confidence in this trade," Rabobank strategist Jane Foley wrote in a report, cutting a one-month euro forecast to $1.19 from $1.20.
Elsewhere, sterling slipped back toward a two-month low, weakening 0.2 percent to $1.3861.
The Australian dollar, seen as a liquid proxy for risk appetite, fell 0.3 percent to $0.75580 week amid concerns over renewed COVID-19 lockdowns across parts of the country.