SINGAPORE (Reuters – The dollar opened the week strongly, helped by sharply increasing U.S. yields. Investors’ tilt towards safety due to lockdowns in China, war at the edges of Europe, fear over higher interest rates, and a nervous jolt through market markets, also supported by the strong U.S. yields.

In early trade, the greenback reached a 22-month high against the New Zealand dollar that is sensitive to growth. It also rose over 0.5% from a peak of three months. However, U.S. stock market futures fell 1%. [MKTS/GLOB]

With 3.1464% as the benchmark and 130.73 yen at 130.73, respectively, this dollar was just one whisker away from its 2018 peak.

Dollar is now close to five-year peak on euro. It fell 0.2% at $1.0529. Sterling hovered around the two-year lows set last week by Bank of England, which warned Britain that it was in recession.

Joe Capurso from the Commonwealth Bank of Australia (OTC) said, “The dollar is supported by U.S.economic outperformance and lower equity prices.”

“Despite substantial increases in interest rates…financial conditions in major economies have not tightened very much…the case for significant additional increases is based on the need to tighten the financial environment and control inflation.”

After the U.S. Federal Reserve raised its benchmark rates rate by 50 basis points, and after strong employment data reinforced expectations of big increases in future hikes, the Dow gained for the fifth consecutive week.

In June 2007, the index stood at 103.78. Futures market prices project a 75% probability of the Fed raising its 75-bp rate at their June meeting and tightening to more than 200bps by the year’s end.

The U.S. inflation data that will be released Wednesday may fuel more aggressive betting, particularly if headline price increases do not slow to 8.1%.

Analysts at ANZ Bank stated that “risks surrounding U.S. CPI seem binary” and suggested that a moderateration of 8.5% would be mildly comfortable, however, a rise in Fed rates to 75 bp would likely revive Fed increases expectations, as well as give the dollar a boost.

As volatility bites, the idea of synchronised global tightening may proceed slowly now seems like a dream.

In the rush for risky assets, cryptocurrencies were battered. On Sunday, bitcoin suffered weekend losses, nearing its lowest level of the year, at $34,000. Ethereum, however, fell 4%.

While the war in Ukraine has disrupted global commodity markets, lockdowns in China have slowed growth.

Last month, China’s unemployment reached its highest level since March 2020. The yuan fell to 6.7319 dollars offshore in order to support the pressure.

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Exchange rate bids starting at 0041 GMT

Description U.S.-Close Pct Change Pct High Low Bid

Previous changes

Session

Euro/Dollar

$1.0526 $1.0548 -0.21% -7.42% +1.0565 +1.0526

Dollar/Yen

130.9050 130.5600 +0.27% +0.00% +130.9500 +130.7300

Euro/Yen

137.77 137.67 +0.07% +0.00% +137.8900 +137.6700

Dollar/Swiss

0.9901 0.9884 +0.15% +8.52% +0.9903 +0.9892

Sterling/Dollar

1.2317 1.2339 -0.15% -8.90% +1.2355 +1.2320

Dollar/Canadian

1.2931 1.2910 +0.17% +0.00% +1.2931 +1.2903

Aussie/Dollar

0.7024 0.7074 -0.71% -3.37% +0.7076 +0.7022

NZ

Dollar/Dollar 0.6378 0.6405 -0.42% -6.82% +0.6404 +0.6378

All spots

Tokyo’s best spots

Europe’s top spots

Volatilities

Tokyo Forex Market Information from BOJ