By Zhang Mengying
Investing.com – The dollar was up on Tuesday morning in Asia as hoisted by safety bids and expectations of further aggressive rate hikes by the U.S. Federal Reserve.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.38% to 108.43 by 1:16 AM ET (0516 GMT).
The USD/JPY pair inched down 0.06% to 137.34. The Bank of Japan is still committed to extraordinary stimulus.
The AUD/USD pair edged down 0.14% to 0.6721, edging back toward the two-year low of $0.6716 reached on Monday amid a commodity price drop and fresh Chinese COVID curbs.
the NZD/USD pair edged down 0.09% to 0.6105.
The USD/CNY pair gained 0.27% to 6.7363, while GBP/USD pair fell 0.24% to 1.1861.
“The dollar really strengthened across the board, reflecting a continuation of the trend that we’ve seen recently, that is global recession fears,” Commonwealth Bank of Australia currency strategist Carol Kong told Reuters.
At the same time, Fed policymakers “will just be laser-focused on high inflation, so they'll just keep on raising rates despite rising recession fears,” she added.
“I think the risk is that the euro dollar can fall to parity as soon as this week.”
Markets are worried about a potential energy supply crunch as the biggest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, has begun its annual maintenance on Monday, with flows expected to stop for 10 days. But markets are worried that Russia might extend the shutdown because of the war in Ukraine.
Investors are also looking to the U.S. Consumer Price Index (CPI) for more clues on the U.S. Federal Reserve’s monetary policy path.
Fed Bank of Atlanta President Raphael Bostic said the U.S. economy can cope with higher interest rates and reiterated his support for another interest rate hike this month.
In Asia-Pacific, investors are concerned about another lockdown as multiple cities discovered cases of the highly infectious BA.5 omicron sub-variant.