Rising recession fears drive US dollar strength across the board

On Thursday, the US dollar rose sharply. The greenback's growth was triggered by investors’ concern about the coming recession in view of the Fed's announcement on raising interest rates next year.

The US currency appeal is magnified amid deterioration of risk appetite as US stocks fell.

The European Central Bank (ECB) raised interest rates after the Fed did the same. Now they are promising further increases.

According to Joe Manimbo, senior market analyst at Convera in Washington, the actions of both the Fed and the ECB will only exacerbate concerns of a recession.

The Fed forecasts that the borrowing costs may increase by 75 basis points by the end of 2023. The target federal funds rate will rise to 5.1% the following year, thus exceeding investors' expectations.

In a research note, JP Morgan Asset Management raised the probability of a recession to 60%, up from the original forecast of 50%.