The yen also rallied as investors speculated that the Japanese central bank or government might act to stabilize the currency, which hit its lowest level in 20 years against the dollar last week.
Concerns about China’s growth have increased as the financial hub of Shanghai has been under a strict lockdown to fight COVID-19 for close to a month.
Overnight, Beijing also stepped up plans to mass test 20 million people, fueling concerns of an impending lockdown.
This “adds fuel to the fire of dollar strength,” said Erik Nelson, macro strategist at Wells Fargo in New York.
The Wall Street Journal also reported Tuesday that Chinese President Xi Jinping has told officials he wants China’s economic growth to outpace that of the United States this year.
The expansion could be less than expected. Last month, China had set an economic growth target of around 5.5% this year.
“The consensus for US GDP growth this year is just over 3%, so that’s a huge downgrade in terms of a growth target,” Nelson said.
The dollar index against a basket of currencies rose 0.61% to 102.30, the highest since March 2020.
The offshore yuan held just above a 17-month low hit on Monday after China’s central bank eased foreign exchange holding requirements for banks in an effort to stem the currency’s slide.
The euro EUR fell 0.63% to $1.0644, the lowest since March 2020.
The single currency has been hurt by the economic impact of the war in Ukraine and by expectations that the European Central Bank will move more slowly than the Fed in raising interest rates.
The euro added to losses after the disruption of Russian gas supplies to Poland was reported.
The US central bank is expected to raise interest rates by 50 basis points when it meets next week, and again in June and July.
Fed fund futures traders expect the Fed benchmark rate to rise to 2.69% by the end of the year from 0.33% currently.
The dollar fell 0.39% against the Japanese yen, appearing to be covering short positions before the Bank of Japan concludes its two-day meeting on Thursday.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
