The greenback also benefited from global growth concerns as Europe grapples with the fallout from Russia’s invasion of Ukraine, and China imposes lockdowns in a bid to curb the spread of Covid-19.
Russia cut off gas supplies to Bulgaria and Poland on Wednesday for refusing their demand for payment in rubles.taking direct aim at European economies, in a move that also exposed confusion in the European Union over how to respond to Moscow’s invasion of Ukraine.
“The threat of a recession in the eurozone from a possible suspension of Russian natural gas shipments has pushed the euro to its lowest level in five years,” Scotiabank analysts Shaun Osborne and Juan Manuel Herrera said in a report.
The euro fell to $1.0515, the weakest level since March 2017, before rising again to $1.0561. The single currency has plunged 4.6% so far in April and is headed for its worst monthly loss in more than seven years.
Germany’s economics ministry on Wednesday cut its 2022 economic growth forecast to 2.2% from its late-January prediction of 3.6% growth this year. French consumer confidence also fell more than expected in April.
Concerns about Chinese growth increased the demand for dollars and further reduced the prospects of other countries more exposed to the world’s second largest economy.
For its part, Beijing stepped up mass testing for Covid-19, while the financial hub of Shanghai was under strict lockdown for about a month.
The dollar index against a basket of currencies hit 103.28 points, the highest since January 2017, and then traded at 102.93.
The strengthening of the dollar also stopped an attempt to rebound in the yen. The yen last traded at $128.3, after hitting a 20-year low of $129.4 last week.
Investors will be watching to see if the Bank of Japan makes any changes to its yield curve control policy to curb yen weakness when it concludes its two-day meeting on Thursday.
Sterling hit a new 21-month low at $1.2502 on falling retail sales, and was down 0.24% at $1.2542.
Source: Ambito
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