Dollar rally accelerates on risk aversion

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Here’s what you need to know this Friday the 25th:

As safe-haven flows dominated financial markets at the start of the week, the greenback continued to strengthen against its main rivals and the US dollar index (DXY) hit its highest level in more than two years. at 101.73 early Monday. Reflecting the risk-averse market mood, US equity index futures are down 0.7% to 0.8% and the benchmark 10-year US Treasury bond yield is down more than 2%. Germany’s IFO business climate survey will feature in the European economic record before the Chicago Federal Reserve releases the national activity index for March later today.

Investors are increasingly concerned about the slowing global economy amid the protracted conflict between Russia and Ukraine, coronavirus-related lockdowns in China and major central banks’ willingness to tighten policies at an aggressive pace.

Ukrainian presidential adviser Mykhailo Podoloyak said over the weekend that Russian forces were “constantly attacking” the Mariupol steel plane, where Ukrainian forces are resisting.

EUR/USD opened with a bullish spread as investors reacted to Emmanuel Macron’s victory in the French election run-off but quickly reversed its direction. After touching its lowest level since March 2020 near 1.0700 during Asian trading hours, the pair recovered a small portion of its daily losses, but was last seen in negative territory below 1 ,0750.

GBP/USD fell 1.5% on Friday after the pound came under heavy selling pressure following disappointing macro data releases from the UK. The pair remains down on Monday morning and is trading at its lowest level in almost 20 months around 1.2730.

Gold is struggling to find demand at the start of the week despite falling US Treasury yields. XAU/USD is trading below $1,920 early Monday, driven by broad dollar strength.

USD/JPY is down slightly as the Japanese yen attracts investors as a safe haven. Speaking at the IMF event on Friday, Bank of Japan (BoJ) Governor Haruhiko Kuroda said the BoJ should persist in aggressive monetary easing.

Bitcoin fluctuated in a relatively tight range over the weekend, but extended its slide after breaking below $40,000 early on Monday. BTC/USD was last seen losing more than 2% on a daily basis at around $38,500. Ethereum closed the previous five days in negative territory and fell sharply towards $2,800 at the start of the week.

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