The dollar hit its highest level in 4 months on Wednesday, as concerns about a third wave of the "Covid-19" pandemic in Europe and the possibility of a tax hike in the United States, and mounting tension between the West and China affected risk appetite.

The dollar index rose to a 4-month high of 92.608 points in early trading in London, the highest level since November 23.

The index, which measures the strength of the US currency against a basket of currencies, rose about 3% since the beginning of the year, contradicting the expectations of a large number of analysts for a decline.

the reasons

  • The euro hit a 4-month low of $ 1.1812 after Germany - the largest consumer of oil in Europe - extended lockdown measures and urged citizens to stick to homes during the Easter holidays.

  • Demand for safe assets received an additional boost when US Treasury Secretary Janet Yellen told lawmakers that tax hikes would be needed in the future to offset payments for infrastructure projects and other public investment.

  • The imposition of human rights sanctions by the United States, Europe and Britain on China, which has also responded with sanctions, exacerbated market concerns.

Other currencies

The safe-haven yen retreated, after gaining in Asian trading, 0.1% at the start of trading in London.

The Australian dollar also fell again today, as it fell to $ 0.7582, a level not seen since February 5.

The British pound fell to $ 1.3675, which is also the lowest level since early February.

As for the cryptocurrencies, it gained 4% to reach 56 thousand and 500 dollars, compared to a record high it had reached more than a week ago at 61,781.83 dollars.

Oil prices backed by a giant ship stranding in the Suez Canal (Getty Images)

 Oil is recovering

Oil prices rose more than 2% as investors sought gains after the sharp drop the previous day, but the recovery was limited by the decline in demand recovery due to new isolation measures to combat the pandemic in Europe and the increase in stocks in the United States.

Brent rose by 1.1% to reach $ 61.48 a barrel by 07:33 GMT, before continuing the journey of gains and climbing two dollars a barrel to 62.79 after a ship stranded in the Suez Canal, which raised fears of the impact of this on global trade.

Brent crude prices had tumbled 5.9% to $ 60.50 the previous day.

West Texas Intermediate crude futures for May delivery rose 2% to $ 58.95 a barrel, after losing 6.2% in the previous session, according to German news agency DPA.

"Investors adjusted their positions after the sharp drop yesterday," said Kazuhiko Saito, chief analyst at brokerage firm Fujitomi Co, "according to Reuters."

"But the market remains expecting a decline due to growing concerns about a recovery in demand in the wake of new restrictions in Europe due to the pandemic," he added.