The dollar is approaching its highest level in 20 years

The dollar index hovered near its highest levels in 20 years against the other major currencies on Friday, as the sell-off in the markets in the face of global recession fears boosted the safe-haven currency.

European shares opened lower and are heading for their worst week in two months, after a sharp fall on Wall Street.

The US currency remained high amid expectations that the US Federal Reserve will tighten monetary policy at a faster pace than its peers to stem hyperinflation.

Analysts said the highly anticipated US jobs report due later in the day may strengthen the case for a strong tightening.

Economists expect 391,000 jobs to be added in the United States last month, according to a Reuters poll. The dollar index, which measures the currency’s performance against a basket of six major rival currencies, rose 0.5 percent in early European trading hours, hitting a 20-year high at 104.07 points. But it later lost steam in choppy trading, and last settled at 103.55.

It was clear that the index would achieve gains for the fifth consecutive week, rising by 0.3 percent during the week. The euro lost as much as 0.5 percent against the dollar in early European trading hours, before reversing course. It was up in the latest trading 0.2 percent to 1.05555 dollars.

Sterling was largely stable after earlier dropping below $1.23 for the first time in nearly two years, a day after the Bank of England sent a dire warning that Britain risked a double whammy of recession and inflation above 10%.

The Bank of England joined the US Federal Reserve and raised interest rates by a quarter of a percentage point to 1 percent. The yen was slightly lower against the dollar, falling 0.2 percent to 130.46 yen to the dollar.

As for cryptocurrencies, Bitcoin is down a bit and is trading at just over $36,000.

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