NEW YORK, Aug 22 – The U.S. dollar rose across the board on Monday, driving the euro back below parity, as investors shied away from riskier assets amid growing fears that interest-rate hikes in the United States and Europe, aimed at curbing inflation, would weaken the global economy.

Against a basket of currencies, the dollar rose 0.8% to a more than five-week high of 109.02 , not far from the two-decade peak of 109.29 touched in mid-July.

The greenback has found support in recent sessions as several Federal Reserve officials reiterated an aggressive monetary tightening stance ahead of the Fed’s Jackson Hole, Wyoming, symposium this week.

The latest of these officials, Richmond Fed President Thomas Barkin, on Friday said the “urge” among central bankers was toward faster, front-loaded rate increases.

“It’s risk being taken off the table after the market got a reality check from last week’s Fed speakers that an imminent dovish pivot is off the cards,” said Michael Brown, head of market intelligence at Caxton in London.

“With investors now clearly expecting a relatively hawkish message from Fed Chair (Jerome) Powell at Jackson Hole on Friday, it’s a perfect cocktail of risk-aversion and a hawkish Fed for the greenback to bound higher, especially when growth worries, especially in Europe, continue to mount,” Brown said.

The euro fell following Russia’s announcement late on Friday of a three-day halt to European gas supplies via the Nord Stream 1 pipeline at the end of this month. Investors worry that the halt could exacerbate an energy crisis that has weighed on the common currency in recent months. 

The European Central Bank must keep raising rates even if a recession in Germany is increasingly likely, as inflation will stay uncomfortably high through 2023, Bundesbank President Joachim Nagel told a German newspaper.

The weakness briefly drove the euro below $1 for the first time since July 14. The euro was last down 1.1% at $0.99345 .

Brown said, “0.9950 seems to be the pivotal level, as that’s the prior low. If that gives way, then we could see significant further losses, especially with the ECB’s window to tighten policy rapidly slamming shut.”

China’s yuan dropped to its lowest in nearly two years after the country’s central bank cut its benchmark lending rate and lowered the mortgage reference by a bigger margin on Monday, adding to last week’s easing measures, as Beijing boosts efforts to revive an economy hobbled by a property crisis and a resurgence of COVID-19 cases.

Against the offshore yuan , the dollar was 0.54% higher at 6.869.

Sterling fell to its lowest since mid-July against the dollar on Monday as surging energy costs and a summer of strikes highlighted the UK cost of living crisis and intensified fears of further economic slowdown.

The pound was last down 0.64% at $1.17565 , within a whisker of taking out the near 2-1/2-year low of 1.17435 touched in mid-July.

In cryptocurrencies, bitcoin was about 2.52% lower at $20,972, weighed down by broad risk aversion in markets.

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