The dollar hit a 24-year high against the yen and a 37-year high against the pound on Wednesday, as Japan’s monetary policy and Europe’s economic woes contrast with a relatively weak U.S. economy. strong and a Federal Reserve determined to reduce inflation to its 2% target.
* The US currency soared to 144.99 yen for the first time since August 1998. It is now one step away from its 1998 high of 147.43. The dollar was last up 0.9% at 144.09 yen.
* Against the British pound, the greenback hit $1.1407, the lowest since 1985, and was last down 0.1% at $1.1509.
* “Increasingly, it’s becoming a growth story and really a crisis story. We have China continuing to have a zero COVID policy, and if anything, continuing to double down by locking down more cities,” said Erik Nelson, macro strategist, from Wells Fargo (NYSE: WFC ).
* “Europe and the UK appear to be headed for a rough couple of months, with a recession very likely for both economies. The US, on the other hand, appears to be holding up,” he added.
* The euro fell below 99 cents on Wednesday, after falling as low as $0.9864 on Tuesday, its lowest since October 2002. Europe’s single currency was last up 0.8% at $0.9985.
* The European Central Bank is seen as likely to raise interest rates by 75 basis points (bps) on Thursday, but such expectations have done little to support the euro given the battered European economy and Russia’s decision to keep it closed indefinitely. the important Nord Stream 1 gas pipeline.
* By contrast, a report on Tuesday showed that the US service sector unexpectedly rebounded last month, reinforcing views that the economy is not in a recession.
* At current dollar/yen levels, there is also speculation that Japan might intervene to prop up the currency.