The U.S. currency soared as high as 144.99 yen, hitting the level for the first time since August 1998
The dollar surged to a 24-year peak against the yen and a 37-year high versus sterling on Wednesday, as Japan’s dovish monetary policy and Europe’s economic problems contrasted with a relatively stronger U.S. economy and a hawkish Federal Reserve determined to bring down inflation to its 2% inflation target.
The U.S. currency soared as high as 144.99 yen, hitting the level for the first time since August 1998. It is now within a large leap of its 1998 high of 147.43. The dollar was last up 0.9% at 144.09 yen.
Increasingly, it is becoming a growth story and really a crisis story. We have China continuing to have a COVID-zero policy, and if anything continuing to double down, locking down more cities, said Erik Nelson, macro strategist, at Wells Fargo in New York City.
Europe and the UK look like they are headed for a challenging couple of months, with recession very likely for both economies. The U.S., on the other hand, looks resilient, he added.
The euro fell below 99 cents on Wednesday after dipping 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 likely to deliver a massive 75 basis-point (bp) rate hike on Thursday, but these expectations have done little to support the euro given a battered European economy and Russia’s decision to keep the key Nord Stream 1 gas pipeline shut indefinitely.
In contrast, a report overnight showed the U.S. services industry unexpectedly picked up last month, underpinning the view that the economy is not in recession.
