Dollar Surges Amid Energy Shock Concerns

The US dollar rose to a two-week high on Wednesday as investors sought safety in the currency due to growing concerns about the economic impact of the energy shock.

The greenback tends to benefit from higher oil prices because the US economy is less exposed to energy shocks than many other major economies, attracting demand at the expense of currencies such as the euro and yen.

George Brown, senior economist at Schroders, expects the European Central Bank to finish its hiking cycle by the end of the year, while the Federal Reserve will likely be just beginning to raise rates.

This should widen rate differentials in favor of the dollar and lead to a weaker euro, according to Brown, who flags that his firm is positioned for a softer euro and expects it to fall to $1.10 against the dollar by year-end.