Nervous financial markets pushed the dollar to a two-decade high yesterday, as rising interest rates around the world heightened fears of a recession, while the pound fell further after recent warnings about British tax cut plans.
The dollar index rose by about half a percent to a new record level at 114.78, and its upward trend supported the continuous rise in the US Treasury bond yields for ten years, which reached the level of 4 percent for the first time since 2010, and recorded 4.013 percent.
The dollar gained broadly, the euro fell 0.43 percent to $0.956, according to “Archyde.com”.
The pound, which is under a lot of pressure, fell 0.7 per cent to $1.0678. The Australian dollar, which is particularly sensitive to fluctuations in investor sentiment, also fell 1 per cent.
The Federal Reserve, the US central bank, is leading the global fight against rising inflation, and has recently become even more hawkish, pointing to more interest rate increases to add to the big moves of the past few months. The continued rise in borrowing costs increased fears of a global recession, which boosted the rise in bond yields around the world.
However, the dollar’s rise against sterling was also affected by British domestic factors, after the British government announced last week a plan to cut taxes and increase borrowing.
This sent sterling down to $1.0327 on Monday, a record low, after settling near the $1.1300 level before the UK budget was announced last week.
In Asia, the yen reached 144.53 per dollar, still near its lowest level in years even after Japan intervened to support the yen.
In addition, gold prices recorded during yesterday’s trading, a new low, the lowest in 30 months, as the attractiveness of the precious metal was undermined amid the rise in the dollar and US Treasury bond yields due to the expectations of the Federal Reserve, the “US Central Bank” raising interest rates more sharply.
By 0854 GMT, spot gold fell 0.1 percent to $ 1626.79 an ounce, after recording its lowest level since April 2020 at $ 1613.60 earlier in the session.
According to “Archyde.com”, US gold futures fell 0.1 percent to $ 1653.10.