This image shows US dollar bills.
Igor Golovnev | Light Rocket | Getty Images
The dollar loomed above fragile financial markets on Tuesday, with worries about rising interest rates, global growth and geopolitical tensions unnerving investors, while the yen tested levels that have prompted official intervention.
That yen hit 145.80 per dollar overnight, just 10 pips off the 24-year low it hit before the Japanese government stepped in to prop it up three weeks ago. Japan came back from a holiday on Tuesday and the yen traded at 145.65.
Strong US labor data and expectations that inflation numbers will remain stubbornly high on Thursday have dashed all bets on anything but high interest rates into 2023, pushing the dollar back toward multi-decade highs.
Russia rained rockets on Ukrainian cities on Monday in retaliation for the blast that damaged the only bridge linking Russia to the annexed Crimea peninsula, with the escalation sending markets into a risk-off mood.
The risk-conscious Australian The US dollar hit a 2½-year low of $0.6275 on Monday and was trading at $0.6296 early Tuesday. Analysts at National Australia Bank said the Aussie was the market’s “whip boy” in a sell-off and that further lows were possible near-term as sentiment was fragile.
That New Zealand dollars also hit a 2½-year low of $0.5545 on Monday and is on the verge of breaking its pandemic bottom, with weak data out of China further dampening sentiment.
“Our expectation that the global economy will enter recession next year is consistent with further dollar gains,” said Carol Kong, strategist at the Commonwealth Bank of Australia.
US dollar index up 0.053% to 113.12, not far from a 20-year high of 114.78 hit late last month.
UK markets remain jittery and are not being reassured as the Bank of England ramps up its bond purchases and Treasury Secretary Kwasi Kwarteng promises to bring forward some budget announcements.
Gilts were heavily sold overnight and sterling was shaky, falling to a 10-day low of $1.1027 on Monday. That lb up 0.28% to $1.1090 on Tuesday.
Comments are closed.