The dollar hits a two-year peak on growth concerns and the expectation of a rate hike

The dollar rose to a two-year high on Tuesday while the euro fell to its lowest level since March 2020, as concerns about the economic impact of China’s anti-Covid-19 lockdowns and expectations of a US interest rate hike supported the greenback.

The dollar index, which measures the performance of the US currency against six major currencies, fell 0.2 percent to 101.92 points.

The euro fell 0.3 percent to $ 1.068, its lowest level since March 2020, when markets were turbulent due to fears of the spread of Covid-19.

The euro was hurt by concerns about the impact of the war in Ukraine on the European regional economy and also by expectations that the European Central Bank would move much slower than the US Federal Reserve in raising interest rates.

“The bet for a further rise (for the dollar index) remains a good bet,” Westpac analysts said in a note. Growth risks in China are on the rise as authorities continue aggressive anti-Covid campaign, conditions in Ukraine remain volatile, Federal Reserve talk Tough as ever.

The Chinese yuan eased slightly in early European trade to 6.583 against the dollar, but moved away from its lowest level in 17 months hit on Monday against the dollar at 6.61.

The yuan began to recover after the People’s Bank of China said late on Monday that it would cut the amount of foreign currency reserves that banks must hold, dispelling some market concerns.

The pound fell 0.1 percent to $1.2722, after hitting its lowest level since September 2020 on Monday night.

The Australian dollar was at $0.7182, little changed but above a two-month low hit on Monday night, after closings in China affected commodity prices.

Against the yen, the dollar fell 0.2 percent to 127.85. The Japanese currency managed to recover slightly this week from a 20-year low of 129.40.

The cryptocurrency Bitcoin climbed 0.56% to $40,668, while Ether recorded $3,008.