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NEW YORK: The safe-haven dollar rose to a fresh four-week high against a basket of currencies on Monday, supported by fears of a global economic slowdown and bets on steep interest rate hikes by the US Federal Reserve.

Global financial markets continued to smart from Friday’s hotter-than-expected US inflation data that led to a broad-based drop in risk sentiment and fuelled bets on even more aggressive policy tightening.

On Monday, government bonds sold off and stock markets around the globe took a beating.

“The USD extended its gains from Friday as risk continues to unwind across the board,” said Brad Bechtel, global head of FX at Jefferies said in a note.

The US Dollar Currency Index, which tracks the greenback against six other major currencies, was up 0.4% at 104.83, within sight of the 2-decade high of 105.01 touched in mid May.

Traders have a lot on their plate this week, including policy meetings by the Fed, the Bank of England and the Swiss National Bank.

The US Federal Reserve is widely expected to raise its key interest rate by 50 basis points on Wednesday, with some, including Barclays and Jefferies, expecting to the Fed to raise rates by 75 basis points.

“A 75 bps (basis points) move is definitely going to be a surprise for some who are holding a hard line on 50 bps,” Bechtel said, adding he expects the dollar index to move higher on such a move.

The battered Japanese yen, floundering near lows against the greenback, not seen since 1998, was one major currency that advanced against the dollar on Monday.

The yen found some support from comments by Japan’s top government spokesperson on Monday that Tokyo is concerned about the currency’s sharp fall and stands ready to “respond appropriately” if needed.

The Bank of Japan (BoJ) has so far resisted pressure to tighten policy, weakening the country’s currency.

On Monday, the dollar was 0.6% lower at 133.58 yen.

The Australian dollar, seen as a liquid proxy for risk appetite, fell 1.3% and the New Zealand dollar fell 1.4%.

Sterling fell to a one month low against the dollar on Monday, coming under selling pressure after data showed Britain’s economy had unexpectedly shrunk in April. Tensions with the European Union over post-Brexit trade with Northern Ireland also weighed on the pound, which was down 1.1% to $1.2175.

Bitcoin slumped 19.1% on Monday after major US cryptocurrency lending company Celsius Network froze withdrawals and transfers citing “extreme” conditions, in the latest sign of how financial market turbulence is causing distress in the cryptosphere.

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