Band Karen Brettell
NEW YORK, April 26 (Reuters) – The dollar hit a two-year high on Tuesday as worries about slowing growth in China and expectations that the Federal Reserve will aggressively raise rates boosted demand for the greenback.
The Japanese yen also rebounded as investors speculated that the central bank or the Japanese government could act to stabilize the currency, which hit a 20-year low against the dollar last week.
Concerns about China’s growth have grown as the Shanghai financial hub was under a strict lockdown to fight COVID-19 for about a month.
Overnight, Beijing also ramped up plans for mass testing of 20 million people and fueling concerns about an impending lockdown.
This “adds fuel to the fire that makes the dollar strong,” said Erik Nelson, macro strategist at Wells Fargo in New York.
The Wall Street Journal also reported on Tuesday that Chinese President Xi Jinping told officials he wants China’s economic growth to outpace that of the United States this year.
It may be slower than expected. Last month, China was aiming for economic growth of around 5.5% this year.
“The consensus for US GDP growth this year is just over 3%, so that’s a huge, huge downgrade in terms of the growth target,” Nelson said.
The dollar index against a basket of currencies =USD was last up 0.61% at 102.30, the highest since March 2020.
The offshore yuan CNH=D3 just below a 17-month low hit on Monday after China’s central bank eased currency holding requirements for banks in a bid to stem the currency’s slide.
euro EUR=EBS fell 0.63% to $1.0644, the lowest since March 2020.
The single currency has been hit by the economic impact of the war in Ukraine and expectations that the European Central Bank will move more slowly than the Fed in raising interest rates.
The euro added to losses after it was reported that deliveries of Russian gas under the Yamal contract to Poland were halted.
The US central bank is expected to raise rates by 50 basis points at its meeting next week and then again in June and July. Fed funds futures traders expect the Fed’s benchmark rate to hit 2.69% by the end of the year, up from 0.33% today. FEDWATCH
The dollar fell 0.39% against the Japanese yen JPY=EBSon what appeared to be short cover before the Bank of Japan wrapped up its two-day meeting on Thursday.
“There is a shift in sentiment and some concern in the market that officials are worried about weakness and may take some action,” said Neil Jones, head of currency sales, Financial Institutions at Mizuho in London.
Investors will be watching if the BOJ makes any changes to its yield curve control policy.
Japanese Prime Minister Fumio Kishida on Tuesday urged the central bank to maintain its ultra-loose monetary policy, ruling out the idea of using interest rate hikes to prevent further declines in the yen.
The British pound GBP=D3 fell 1.20% to $1.2586, the lowest since July 2020.
Bitcoin BTC=BTSP fell 5.48% to $38,226+ ETH=BTSP fell 5.68% to $2,835.
================================================= =====
Currency prices at 3:09 p.m. (7:09 p.m. GMT)
The description
RIC
Last
Closing of the previous session
Percentage change
Percentage change since the beginning of the year
High bid
Low bid
dollar index
=USD
102.3000
101.7000
+0.61%
6.938%
+102.3300
+101.5000
euro dollar
EUR=EBS
$1.0644
$1.0713
-0.63%
-6.36%
+$1.0738
+$1.0641
dollar/yen
JPY=D3
127.6050
128.0850
-0.39%
+10.93%
+128.1950
+127.0400
Euro/Yen
EURJPY=
135.83
137.24
-1.03%
+4.23%
+137.5300
+135.4100
Dollar/Swiss
CHF=EBS
0.9624
0.9596
+0.30%
+5.51%
+0.9624
+0.9565
British pound/dollar
GBP=D3
$1.2586
$1.2740
-1.20%
-6.92%
+$1.2772
+$1.2585
Canadian dollar
CAD=D3
1.2806
1.2738
+0.55%
+1.29%
+1.2828
+1.2685
Australian/Dollar
AUD=D3
$0.7139
$0.7180
-0.55%
-1.77%
+$0.7229
+$0.7140
Euro/Switzerland
EURCHF=
1.0242
1.0276
-0.33%
-1.22%
+1.0290
+1.0212
Euro/pound sterling
EURGBP=
0.8455
0.8408
+0.56%
+0.65%
+0.8459
+0.8394
New Zealand Dollar/Dollar
USD=D3
$0.6575
$0.6622
-0.66%
-3.89%
+$0.6645
+$0.6578
Dollar/Norway
NOK=D3
9.2350
9.1230
+1.23%
+4.83%
+9.2390
+9.0800
Euro/Norway
EURNOK=
9.8320
9.7685
+0.65%
-1.81%
+9.8458
+9.7433
Dollar/Sweden
SEK=
9.8260
9.7070
+0.55%
+8.96%
+9.8384
+9.6881
Euro/Sweden
EUREK=
10.4594
10.4017
+0.55%
+2.20%
+10.4760
+10.3754
(Additional reporting by Tommy Wilkes and Dhara Ranasinghe in London; Editing by Emelia Sithole-Matarise and Ken Ferris)
((karen.brettell@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
