SINGAPORE (Reuters) – The U.S. dollar began Monday where it left off last week, caught between pressure from worries about the lagging U.S. economic recovery and support from rising U.S. bond yields and safe-harbour demand.

A boost to sentiment from the postponement of the U.S-China trade deal review – which leaves the deal intact – was muted by uncertainty, ahead of a week a week that includes Federal Reserve minutes and the Democrats’ nomination convention.

Against a basket of currencies the dollar traded under gentle pressure at 93.039 on Monday, roughly in the middle of the range it has held since hitting a two-year low at the end of July.

The risk-sensitive Australian dollar AUD=D3 inched up to a three-session high of $0.7194, but also remained contained in the channel it has traded in for a week.

Other Asian currencies, such as the won KRW= and rupiah IDR= edged lower, while the kiwi NZD=D3 remained weighted at $0.6534 by last week’s dovish language from the central bank.

The yen JPY= was steady at 106.54 per dollar, having dipped last week as a jump in U.S. yields drew Japanese investment to U.S. Treasuries.

REVIEW DELAY

The United States and China delayed a Saturday review of their Phase 1 trade deal, people familiar with the plans told Reuters, citing scheduling conflicts.

“That’s good news in the sense that it’s something we can place on the back burner for now,” said National Australia Bank senior foreign exchange strategist Rodrigo Catril.

“But there are other uncertainties coming up that need to be resolved,” he said, pointing to U.S. politics as a presidential election looms, and new virus hot spots in Europe that could challenge the perception that the euro is on an uptrend.

U.S. President Donald Trump also flagged a broadening of his pressure on Chinese tech firms such as e-commerce giant Alibaba Group Holding Ltd (BABA.N).

The yuan CNH=, often a barometer of relations between the two countries, was unmoved in offshore trade on Monday morning, and last traded at 6.9364 per dollar.

ELECTION DELAY

Elsewhere, in Japan, data showed the world’s third-largest economy suffered its acutest economic contraction on record in the second fiscal quarter as the COVID-19 pandemic crushed business and consumer spending.

New Zealand delayed a general election by a month as it grapples with a new outbreak of the pathogen, while there have been flare-ups in infections in South Korea, Spain and France.

The euro EUR=EBS and sterling GBP=D3 were steady in Asia, with the euro last buying $1.1844 and sterling $1.3095.

On the horizon, the Democratic national convention in the United States begins on Monday, and is something of a starting gun for the final sprint to the November election. It culminates in a speech from presumptive nominee Joe Biden late on Thursday.

Markets are also on edge ahead of the release of Federal Reserve minutes on Thursday, looking for any hints of a possible change to the central bank’s guidance at its next meeting in September.

Investors are expecting more tolerance in the Fed’s approach to inflation, said Chris Weston, head of research at Melbourne brokerage Pepperstone.

“The bond market is key here and if the Fed can drive down real yields then the dollar will follow, and gold will rally – and vice versa,” he said.

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