Global equities faltered, oil fell and the euro inched closer to parity with the safe haven dollar today as the prospect of further tightening by central banks, renewed Covid outbreaks in China and Europe's energy shortages spooked investors.
The euro fell as low as $1.0005 against the US dollar, moving ever closer to parity for the first time since December 2002, as investors worry an energy crisis will tip the region into a recession. "Risk-off sentiment is dominating global markets," said Yuting Shao, macro strategist at State Street Global Markets. "The dollar is the go-to international reserve currency.
So when there is a recessionary risk or there's pickup of volatility, the greenback is the currency that people rush to because that is the safest," Shao added.
The dollar index, which tracks the currency against a basked of six peers rose to 108.44, the highest since October 2002. The focus for this week will be macro data including US consumer inflation on Wednesday, and comments from Federal Reserve Officials as investors look for clues on the outcome of the Fed's upcoming policy meeting before officials enter the pre-meet blackout period.