The Dollar is at Its Highest Levels in 2021

The US dollar reached its highest level this year on Wednesday after rallying as US Treasury yields increased on investor fears that the Federal Reserve could begin withdrawing its policy support at a time when global growth is slowing.

The euro fell to $1.1657, its lowest level from November 2020, and the dollar index rose to an 11-month high of 93.891.

The yen, which is sensitive to US yields as higher interest rates could draw inflows from Japan, touched an 18-month low of 111,685 yen per dollar before recovering slightly to 111.47 yen per dollar.

The yen showed little reaction to former Japanese Foreign Minister Fumio Kishida’s victory in a leadership vote for the ruling Liberal Democratic Party, effectively guaranteeing him to succeed incumbent Prime Minister Yoshihide Suga within days.

The British pound extended its losses after it was affected yesterday by concerns about the economic impact of the shortage of gas and the crowding for fuel, and it recorded its lowest level since January at $1.3505.

On the other hand, energy prices are rising and concerns are growing about growth prospects in China, which is experiencing risks from the collapse of the Evergrande real estate company and from blackouts affecting production.

The Chinese yuan was resilient against the dollar but fell on Wednesday after the Japan Pension Fund said it would not buy Chinese government bonds even after they were included in a major index.