TOKYO- The US dollar hit a fresh two-decade peak versus major peers on Tuesday, hoisted by safety bids and expectations of further aggressive rate hikes by the Federal Reserve, while the euro was pinned close to a 20-year low near parity to the greenback.
The dollar index, a measure against six counterparts, with the euro most heavily weighted, was 0.25 percent higher at 108.43. It had earlier climbed to 108.47, its highest since October 2002.
“Haven demand for USD, coupled with an upside surprise in last Friday’s payrolls release, likely contributed to the latest bout of dollar strength,” said analysts at Maybank.
That dollar bullishness was showcased across much of the currency markets, with the euro falling as low as $1.0006 on Tuesday, the weakest since December 2002. It last changed hands down 0.29 percent at $1.0013.
Sterling was similarly down 0.25 percent to $1.18645, after earlier sinking to a fresh two-year low at $1.186.
“EUR depreciation of late appears to have been largely driven by the market reassessing the potential for a more significant growth downturn in the Euro area, amplified by energy woes, war dragging on longer than expected and doubts over ECB’s anti-fragmentation tool,” the Maybank analysts said.
The biggest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began annual maintenance on Monday, with flows expected to stop for 10 days.
Governments, markets and companies are worried Russia might extend the shutdown because of the war in Ukraine, exacerbating the continent’s energy supply crunch and potentially speeding a recession.
