Demand for safe investment pushed the US dollar to its highest level since 2002, while the euro tumbled to a two-decade low, while the latest jump in European gas prices fueled recession fears.
The dollar index rose 1.6 percent at one point and the euro fell as much as 1.75%, hitting its lowest level since late 2002. This is the biggest one-day drop for the European currency and the biggest one-day gain for the dollar since the Covid-19 pandemic hit the markets in March 2020.
The Japanese yen fell to its lowest level in nearly 24 years, the Canadian dollar hit its weakest level in 19 months, and the Norwegian krone fell more than 2% as oil and gas workers began a strike.
The risks of Europe sliding into recession increased after a 17% jump in natural gas prices in both Europe and Britain, which is expected to push inflation further up.
The pound sank to a two-year low against the dollar, hurt by a crisis in British Prime Minister Boris Johnson’s government.
The sterling fell earlier to $1.1929, its lowest level since 2020. Then it recovered some of its losses to trade in late trading at $1,195.
The Australian dollar fell despite a 50 basis point increase in interest rates for the second month in a row. The Aussie fell 1.4% to $0.677.
The Australian dollar is now about 7% below its level at the beginning of the year.
The dollar’s strength pushed the Japanese currency to a 24-year low before it recovered some of its losses. And recorded in late trading 135.70 yen to the dollar.