(Adds details, updates prices)
The dollar hit a two-year high on Tuesday as concerns about slowing growth in China and expectations the Federal Reserve will aggressively hike rates boosted demand for the greenback.
The Japanese yen also rebounded as investors speculated that the Japanese central bank or government may act to stabilise the currency, which last week hit a 20-year low against the dollar.
Concerns about Chinese growth have increased with the financial hub of Shanghai having been under strict lockdown to fight COVID-19 for around a month.
Beijing overnight also ramped up plans for mass-testing of 20 million people and fuelled worries about a looming lockdown.
This is "adding fuel to the fire that is dollar strength," said Erik Nelson, a macro strategist at Wells Fargo in New York.
The Wall Street Journal also on Tuesday reported that Chinese President Xi Jinping has told officials that he wants China’s economic growth to outpace the United States' this year.
That may be slower than previously expected. China last month targeted economic growth of around 5.5% this year.
"Consensus for U.S. GDP growth this year is just barely above 3%, so that’s a huge, huge downgrade in terms of a growth target," said Nelson.
The dollar index against a basket of currencies =USD was last up 0.61% at 102.30, the highest since March 2020.
The offshore yuan CNH=D3 held just below a 17-month low reached on Monday after China's central bank eased banks' foreign exchange holding requirements in an effort to stem the currency's drop.
The euro EUR=EBS fell 0.63% to $1.0644, the lowest since March 2020.
The single currency has been hurt by the economic impact of the war in Ukraine and by expectations the European Central Bank will move more slowly than the Fed in raising interest rates.
The euro added to losses after it was reported that Russian gas supplies under the Yamal contract to Poland have been halted.
The U.S. central bank is expected to raise rates by 50 basis points when it meets next week, and again in June and July. Fed funds futures traders expect the Fed’s benchmark rate to rise to 2.69% by year-end, from 0.33% today. FEDWATCH
The dollar dropped 0.39% against the Japanese yen JPY=EBS , on what appeared to be short-covering before the Bank of Japan concludes its two-day meeting on Thursday.
"There is a shift in sentiment and some concern in the market that officials are concerned about weakness and may take some measures," said Neil Jones, head of FX sales, Financial Institutions at Mizuho in London.
Investors will be watching to see if the BOJ makes any changes to its yield curve control policy.
Japanese Prime Minister Fumio Kishida on Tuesday urged the central bank to maintain its ultra-loose monetary policy, brushing aside the idea of using interest rate hikes to prevent further declines in the yen.
The British pound GBP=D3 dropped 1.20% to $1.2586, the lowest since July 2020.
Bitcoin BTC=BTSP fell 5.48% to $38,226 and ether ETH=BTSP fell 5.68% to $2,835.
======================================================== Currency bid prices at 3:09PM (1909 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 102.3000 101.7000 +0.61% 6.938% +102.3300 +101.5000 Euro/Dollar EUR=EBS $1.0644 $1.0713 -0.63% -6.36% +$1.0738 +$1.0641 Dollar/Yen JPY=D3 127.6050 128.0850 -0.39% +10.93% +128.1950 +127.0400 Euro/Yen EURJPY= 135.83 137.24 -1.03% +4.23% +137.5300 +135.4100 Dollar/Swiss CHF=EBS 0.9624 0.9596 +0.30% +5.51% +0.9624 +0.9565 Sterling/Dollar GBP=D3 $1.2586 $1.2740 -1.20% -6.92% +$1.2772 +$1.2585 Dollar/Canadian CAD=D3 1.2806 1.2738 +0.55% +1.29% +1.2828 +1.2685 Aussie/Dollar AUD=D3 $0.7139 $0.7180 -0.55% -1.77% +$0.7229 +$0.7140 Euro/Swiss EURCHF= 1.0242 1.0276 -0.33% -1.22% +1.0290 +1.0212 Euro/Sterling EURGBP= 0.8455 0.8408 +0.56% +0.65% +0.8459 +0.8394 NZ NZD=D3 $0.6575 $0.6622 -0.66% -3.89% +$0.6645 +$0.6578 Dollar/DollarDollar/Norway NOK=D3 9.2350 9.1230 +1.23% +4.83% +9.2390 +9.0800 Euro/Norway EURNOK= 9.8320 9.7685 +0.65% -1.81% +9.8458 +9.7433 Dollar/Sweden SEK= 9.8260 9.7070 +0.55% +8.96% +9.8384 +9.6881 Euro/Sweden EURSEK= 10.4594 10.4017 +0.55% +2.20% +10.4760 +10.3754
