U.S. and global recession fears have finally hit the round-the-clock currency market after more than a month of evaluation by traders — sending the dollar to its highest levels of almost 20 years as it jumped versus several rivals on mounting growth concerns. The ICE U.S. Dollar Index DXY rose 1.5% to 106.69 on Tuesday, the highest level since 2002.
The euro EURUSD , Australian AUDUSD and Canadian dollars USDCAD , and Norwegian krone USDNOK underperformed by comparison, while emerging-market currencies like the South African rand USDZAR , Hungarian forint USDHUF , and Chilean peso USDCLP also took a hit. Meanwhile, the Japanese yen USDJPY stabilized.
The currencies of smaller countries like Australia, Canada and Norway — as well as emerging markets — tend to be more driven by global economic factors, outperforming when growth prospects are bright and underperforming when they’re not.