Buyers storm U.S. dollar, sending euro, pound, yen crumbling

Lola Evans
02 Sep 2022, 06:12 GMT+10

The U.S. dollar soared on Thursday, breaking through several technical barriers.
The benchmark DXY U.S. dollar index at one stage hit 110,00, a level not seen in decades.
The British pound fell to a two-year low at 1.1500 before recovering slightly.

NEW YORK, New York - The U.S. dollar soared on Thursday, breaking through several technical barriers.

The benchmark DXY U.S. dollar index at one stage hit 110.00, a level not seen in decades.

The British pound fell to a two-year low at 1.1500 before recovering slightly. The Japanese yen toppled the 140,00 level in a day that saw frantic buying of the greenback. The Australian dollar finally forced its way through a 0.6870 technical blockage to drop more than a full cent.

In the UK, the pound was trading at levels not seen Brexit. Inflation in Britain rose by 10.10 percent in July, and according to the Bank of England, will hit 13.30 percent by year's end.

"We think the pound will fall to around $1.05 by the middle of next year. That would leave it below the levels reached before the 1985 Plaza Accord ($1.09), after the UK left the ERM in 1992 ($1.43), during the 2008/09 Global Financial Crisis ($1.38), after the 2016 Brexit vote ($1.21) and during the 2020 COVID-19 crisis ($1.21)," CNBC quoted Capital Economics Chief U.K. Economist Paul Dales as saying in a research note Thursday.

"In fact, $1.05 would be an all-time record low. At the same time, with high inflation likely to prevent the Bank of England from cutting interest rates as soon as the financial markets anticipate, we expect only a small fall in 10-year gilt yields by the end of this year and a big decline in the FTSE 100," Dales wrote.

The euro, which had recently hurdled the 1.00 level to trade above parity, sank towards 0.9109 Thursday before recovering to 0.9944 around the New York close.

The British pound finished around 1.1539. The Japanese yen buckled to 140.17. The Swiss franc slid to 0.9820.

The Canadian dollar slipped to 1.3163. The Australian dollar fell sharply to 0.6781.

The New Zealand dollar dived to 0.6072.

Dow Jones gains 146 points after choppy day on Wall Street

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