The dollar hit multi-year highs against the euro and yen and emerging markets were under mounting pressure on Tuesday, as the prospect of the first rise in U.S. interest rates in almost a decade stoked global volatility.
The skittish mood spread from Asia into Europe where stocks <0#.INDEXE> fell a second day despite the European Central Bank’s new bond buying campaign continuing to push down the euro and the bloc’s already record-low borrowing costs.
Driving up the dollar was speculation that the Federal Reserve will start lifting interest rates from mid-year after another stellar set jobs data on Friday and a subsequent chorus of hawkish Fed policymaker comments.
The euro’s rapid melt lower was compounded by worries about Greece as euro zone finance ministers prepared to meet in Brussels, a day after the head of the group, Jeroen Dijsselbloem, had urged Athens to “stop wasting time” and start reforms.
Selling in the euro had gathered pace again in Europe as a break below a major layer of chart support at $1.0762 to $1.0735 left bears eyeing $1.07 the figure and some mulling parity. Britain’s pound was also piling on the pressure. It topped 1.40 euros for the first time since late 2007.
The dollar had broken higher on the yen in Asia to reach 122.02, territory not visited since July 2007.
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