Dollar breaks record against biggest currencies as refuge-seeking
The dollar’s gains this year are fueled by a combination of higher interest rates, purchases by investors seeking refuge from the turmoil in the markets.
An indicator of the dollar’s strength against major international currencies rose to its highest level on record, surpassing the peak of the pandemic.
The dollar’s gains this year are fueled by a combination of higher interest rates, purchases from investors seeking refuge from the turmoil in financial markets and worries about a recession.
The Bloomberg Dollar Spot Index, which tracks the dollar against a basket of developed and emerging market currencies, rose as much as 0.8% on Thursday to a level above the record it reached in March 2020 in data dating back to 2020. 2005.
“We are seeing the widening and increasing persistence of US inflation, resulting in markets upping their ante on the implied trajectory of US interest rates,” said Simon Harvey, head of currency analysis at Monex Europe.
“This is adding a lot of pressure on global risk in currencies, equities, rates, whatever. Everything is under pressure right now, and in this environment it is very difficult for currency markets to look outside of the dollar.”
The ICE US Dollar Index, another indicator that compares the dollar only to the currencies of developed countries and gives the euro a heavier weight, has surpassed its peak of the pandemic earlier this year and is currently close to its strongest level in two decades.
The Canadian dollar and the yen were among the main declines in the group of top 10 currencies of developed countries on Thursday.