The US dollar index topped 101 on Tuesday for the first time since March 2020 as the greenback hit a fresh 20-year high against the yen, and the euro tested a two-year high on the back of high US Treasury yields and reasonable expectations. Economic data. The US dollar index, which measures the greenback against six currencies, was last at 100.99, up 0.2 per cent, after rising as high as 101.02 in early trade. It has gained 2.6 per cent so far this month.

“I think the dollar’s general trend reflects the outperformance of the US economy, while we’ve seen some initial impact of the US war on higher energy prices elsewhere, especially in the eurozone,” said Carol Kong, currency strategist at Commonwealth Bank of Australia. She added that she was following Friday’s PMI data in several markets.

“If we get weak PMI data in the eurozone or elsewhere, then the market may downgrade expectations for the global economy, but I don’t think the PMI in the US will be particularly weak, so we will see some contrast there, which is likely to support the dollar,” she said. The dollar had the most dramatic gains against the yen, rising 0.73 per cent to 127.88 on Tuesday, its highest level since May 2002.

The yen has gained 4.5 per cent against the yen so far this month, which would be the second-biggest monthly percentage gain since 2016, after last month’s 5.8 per cent gain. The yield on the benchmark US 10-year Treasury note was at 2.8376 on Tuesday, just below a 3-year high of 2.884 per cent hit on Monday, while the Bank of Japan has been intervening to keep the 10-year yield around 0 per cent cent and has not higher than 0.25 percentage points.

Many investors are betting the yen will fall further. The latest CFTC data for the week ended April 12 showed that the net short position in the yen was the largest in three-and-a-half years. The dollar rose to as high as 0.9466 Swiss francs, its highest in a year, and tested highs against other major currencies. The euro was at $1.0776, just below last week’s two-year low of $1.0756, while the pound was at $1.3009, having also hit an 18-month low of $1.2973 last week.

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The Australian dollar rose 0.3 per cent to $0.737 from a one-month low on Monday, with some support provided on Tuesday by minutes of the Reserve Bank of Australia’s April policy meeting, which showed the central bank was edging closer to raising interest rates for the first time in more than a decade, due to accelerating inflation.
Bitcoin also managed to find its footing, trading around $40,800 on Tuesday after hitting a one-month low of $38,547 on Monday.