Rate Hike, Growth Concerns Lift U.S. Dollar

The U.S. dollar climbed against its major counterparts in the European session on Wednesday, as European shares dropped on concerns that aggressive interest rate hikes by central banks in Europe and the U.S. could curtail global growth.

Eurozone inflation hit a new record in August, adding further pressure on the European Central Bank to tighten policy more aggressively as soon as next week.

Inflation rose to 9.1 percent in August from 8.9 percent in July. The pace was also above economists' forecast of 9.0 percent.

Comments from Fed officials signalling aggressive rate hikes and a drop in commodities further dampened risk sentiment.

Russian energy giant Gazprom announced that gas flows through the Nord Stream pipeline have been stopped temporarily for maintenance.

The benchmark yield on 10-year treasury note moved up to 3.134 percent. Yields move inversely to bond prices.

On the economic front, data from payroll processor ADP showed that U.S. private sector employment increased much less than expected in August.

ADP said private sector employment rose by 132,000 jobs in August after jumping by nearly 270,000 jobs in July. Economists had expected employment to surge by 288,000 jobs.

The currency fell against its major rivals in the Asian session, except the franc.

The greenback firmed to 1.1602 against the pound, a level unseen since March 2020. The pound-greenback pair had finished yesterday's trading session at 1.1655. The next possible upside target for the currency is seen around the 1.14 level.

The greenback was up at a 2-day high of 0.9971 against the euro. The pair had closed Tuesday's deals at 1.0012. The greenback is likely to challenge resistance around the 0.96 level.

The USD/CHF pair touched a 1-1/2-month high of 0.9807. At Tuesday's close, the pair was valued at 0.9736. If the greenback rises further, it may find resistance around the 1.00 level.

The greenback appreciated to 2-day highs of 0.6841 against the aussie and 0.6111 against the kiwi, from Tuesday's closing values of 0.6852 and 0.6129, respectively. Next key resistance for the currency is seen around 0.67 against the aussie and 0.59 against the kiwi.

Against the loonie, the greenback jumped to a 1-1/2-month high of 1.3139. The pair ended yesterday's deals at 1.3092. The greenback may challenge resistance around the 1.33 region, if it rises again.

After a brief pullback following weak ADP data, the greenback regained ground against the yen and was trading at 138.78. The pair was worth 138.79 at yesterday's close. On the upside, 140.00 is possibly seen as the next resistance level.