The dollar hits its highest level in five years and growth concerns hit the euro

New York — The dollar hit a five-year high on Wednesday, but the Federal Reserve is expected to raise rates next week, but the euro is worried about growth after Russia cuts off gas supplies to parts of the region. Weakened from.

The dollar rose on the expectation that the US central bank would be more hawkish than its peers. The Fed is expected to raise interest rates by 50 basis points in May 3-4 meetings and in June and July.

Greenback is also benefiting from global growth concerns as Europe suffers from the effects of Russia’s invasion of Ukraine and China is implementing a blockade to stop the spread of COVID-19.

Russia’s Gazprom cuts gas supplies to Poland and Bulgaria for failing to pay the ruble in response to Western sanctions imposed on Moscow’s invasion of Ukraine, and the economy with Europe Caused a war.

“This puts further upward pressure on gas prices in the region and is worried that it has deteriorated rapidly since the beginning of the year,” said Dominique Banning, head of European FX research at HSBC, in a report. It is exacerbating the combination of growth and inflation. “

Concerns over China’s growth have added to the demand for the dollar, further exacerbating the outlook for other countries exposed to the world’s second-largest economy.

Beijing has stepped up its COVID-19 mass inspection, and Shanghai’s financial hub has been tightly closed for about a month.

Jane Foley, Head of Forex Strategy at Rabobank London, said:

The dollar index for a basket of currencies reached 103.05, the highest since January 2017.

The euro fell 0.83 percent to $ 1.0549, the lowest since March 2017. Single currencies have fallen 4.7 percent so far in April, heading for the worst monthly losses in more than seven years.

On Wednesday, Germany’s Ministry of Economy lowered its 2022 economic growth forecast from this year’s 3.6% growth forecast in late January to 2.2%. Consumer confidence in France also fell more than expected in April.

The stronger dollar also slowed the yen’s bounce attempt, which had gained some support from its positioning on security trends and the risk of policy shifts. The yen was last traded at 128.09 per dollar after hitting a 20-year low at 129.4 last week.

Investors are watching whether the Bank of Japan will make changes to its yield curve control policy to stop the depreciation of the yen at the end of its two-day meeting on Thursday.

Sterling hit a 21-month low of $ 1.2529 as retail sales fell, and finally fell 0.07% to $ 1.2566.

The Australian dollar temporarily hit its lowest level since February, but after some winds after Australian consumer prices soared at the fastest annual pace in 20 years, interest rates soon hit record lows next week. It spurred speculation that it could be pulled up from. Australia was up 0.08 percent at $ 0.7131.

By Karen Brettell