The dollar’s broad surge has halted

The dollar paused on Tuesday following a sweeping advance, dropping slightly from milestone highs against the euro, yen, and sterling, but not too much, given Europe is in recession.

A holiday in the United States slowed overnight activity. The highlight of the Asia session on Tuesday will be a central bank meeting in Australia, where markets have priced in a 64% likelihood of a 50 basis point rate hike.

Russia has suspended gas flow along the Nord Stream 1 pipeline to Germany indefinitely, initially blaming an oil leak at a compressor plant but later linked the halt to western sanctions.

On the announcement, sterling fell to a 212-year low of $1.3214 but regained 0.5% to $1.1575 in Asia. Liz Truss became Britain’s new Prime Minister on Monday after winning a leadership election, and her promises of tax cuts have added uncertainty to the government’s finances.

Currencies

The euro rose 0.4% to $0.9959 in early Asian trade after falling to a two-decade bottom of $0.9776 on Monday as the threat of winter without Russian gas became clear.

After reaching a high of 110.26 on Monday, the dollar index dipped 0.2% to 108.46. The yen last traded at 140.30 per dollar, not distant from a 24-year low of 140.81 recorded last week, as US rate hikes accelerate and widen the gap on anchored Japanese interest rates.

Chinese officials have stepped up their opposition to the dollar’s surge, cutting the foreign exchange reserve requirement ratio late on Monday, freeing up dollars for banks to sell.

The move barely impacted the currency rate, with the yuan remaining stable at 6.9213 in offshore trade.

The Australian and New Zealand dollars jumped around 0.5% in morning trade, despite analysts’ doubts that a significant rate hike in Australia would push the dial too far.

The Australian dollar was last up 0.4% at $0.6789, while the New Zealand dollar was up 0.6% at $0.6112.