The dollar was down on Tuesday morning in Asian markets but was near to its two-year high against the euro and an 18-month high against the pound. Concerns about the economic effect of China’s COVID-19 lockdowns and the aggressive pace of U.S. interest rate hikes gave the safe-haven dollar a raise.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.23% to 101.535. Meanwhile, On Monday the dollar index jumped 0.58% and touch a two-year peak of 101.86. The index has moved 3.3% in April 2022 to date, the highest month of gains since November 2015.
Hawkish comments by many central bank policymakers during the last week also raised the probability of aggressive interest rate policy hardening. The U.S. Federal Reserve is broadly expected to hike rates by a half-point at each of its coming two meetings. These concerns not only drove investors to the greenback but also caused equity markets to sell off heavily and U.S. Treasury yields to fall.
“Further dollar index moving upside remains a good bet. China growth risks are rising as authorities follow an aggressive COVID-19 actions, conditions around Russia-Ukraine remain volatile and ‘Fedspeak’ remains as hawkish as ever,” Westpac analysts said in a note.
Across the Atlantic, the pound hit its lowest since September 2020 overnight. In Asia Pacific, the Australian dollar hit a two-month low overnight as China’s COVID-19 lockdowns considered on commodity prices.