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  • Writer's pictureanalysiswatch

Title: Dollar pauses for breath, eyes best month in a decade

Apr 29, 2022 01:45AM ET

By: AnalysisWatch

The dollar retreated from a 20-year high on Friday but was on track for its best monthly rise in a decade, helped by bets on rising U.S. interest rates and concerns about growth in Europe and China.

It has risen every week in April, with this week's gains helped by the Bank of Japan, which on Thursday sent the yen below 130 per dollar for the first time since 2002 as it reaffirmed its commitment to a policy of very low interest rates.

The U.S. dollar index, which hit a 20-year high of 103.93 as the yen fell, was last at 103.40 and has gained more than 5.1% through April. If the trend continues, this would be the best monthly gain since May 2012.

Thursday's weaker-than-expected U.S. quarterly growth data proved little impediment to the dollar's rise, and investors made few adjustments to their bets on short-term interest rates.

The euro, meanwhile, fell below $1.05 on Thursday for the first time in five years and was last held at $1.0526. Trading in Asia was subdued due to a holiday in Japan.

The euro lost almost 5% against the dollar in April and almost 7% since Russia invaded Ukraine on February 24.

The conflict, and in particular this week's halt of Russian gas supplies to Poland and Bulgaria, has investors worried about energy security, inflation, and growth in Europe.

The currency is on track for a 4.1% monthly decline, the steepest drop since currency reform in 1994.

The Australian dollar hit a three-month low of $0.7055 overnight before recovering to $0.7152 on Friday as investors expect Australia's monetary tightening cycle to begin as early as next week.

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