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The Dollar Reaches a 20-Year High

by Carl Steward
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U.S. dollar rebounded Tuesday. What about other currencies?The Dollar Reaches a 20-Year High

On Monday, the dollar reached a 20-year high versus other major currencies after Federal Reserve Chair Jerome Powell said that interest rates would be kept higher for longer to contain growing inflation.

The dollar index hit a record two-decade high of 118.48.

This kept its European peers in the doldrums, despite hawkish European Central Bank statements raising expectations for a massive rate hike in September.

In early European trade, the euro was down a quarter percent, trading at $0.91245, close to recent 20-year lows, while the pound fell to a 2-1/2 year low. The markets in London did not operate due to a public holiday.

Money markets responded by increasing betting for a more aggressive Fed rate hike in September, with a 75bps hike now regarded as approximately 70% likely.

Treasury yields in the United States increased, with two-year bond yields reaching a 15-year high of roughly 3.39%, boosting the greenback.


The dollar rose 0.8% to 128.81 yen, its best level since July 21, while the offshore yuan dropped to a new two-year low of 6.9321 per dollar.

In early Moscow trade, the Russian rouble held near its lowest level in more than a week against the dollar as the peak of a favorable tax payment period passed and Russian stocks hit a two-month high.

Sterling dropped to a two-and-a-half-year low of $1.1638 and was last down 0.49% at $1.1649.

Despite the possibility of a large ECB rate hike in September, the euro has suffered due to the bloc’s energy crisis, which raises recession chances. Gazprom, Russia’s state-owned energy company, will likely cease natural gas exports to Europe from August 31 to September 2.

The Australian dollar sank to $0.6342, its lowest level since July 19, while the New Zealand dollar fell to $0.58, its lowest level since mid-July.

In the cryptocurrency market, Bitcoin regained some ground but stayed below the $20,234 threshold it fell below over the weekend.

The post The Dollar Reaches a 20-Year High appeared first on forexinsider24.com.

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