The dollar climbs to highest level in two decades

The dollar rose to a 20-year high on Monday as a combination of rising US Treasury yields and closings in China boosted the dollar’s safe-haven appeal.

Against a basket of major currencies, the dollar index exceeded 104.19 for the first time since July 2002, continuing its rise by nine percent this year.

The dollar’s rally was supported by a relentless rise in US Treasury yields. On Monday, yields on the benchmark 10-year bond hit 3.18 percent for the first time since November 2018. It has doubled in the past two months.

The pace of the Fed’s rate hike cycle is much higher than its counterparts, the Bank of England and the European Central Bank.

Money markets expect the US to raise interest rates by another 200 basis points over the remainder of the year, raising benchmark interest rates to nearly 3 percent.

The growth-sensitive Australian dollar fell 1 percent to $0.6999, its lowest since February. The British pound and the New Zealand dollar reached their lowest levels in 22 months, while the euro and the yen did not register a significant increase from the significant declines reached recently.

Cryptocurrencies pulled back on a rally away from risky assets, with bitcoin near its lowest level this year at $33,500 while Ether, which fell four percent on Sunday, was at $2,440.