The United States dollar index or also known as DXY set a new two-year high of 101.90 in asian trading on Tuesday. It was following a wave of risk-off action that broke out earlier this week. 

The market participants are concerned about the economic impact of a broader and tighter COVID-19 lockdown in China. That made them turned to safe haven assets such as the Japanese yen and the U.S. dollar.

Shanghai as the China's number one financial hub, has been on lockdown for about a month. The Chinese government today began the mass tests of 20 million people in Beijing.

That was a move it fears which may trigger a similar lockdown in the country's capital. In the other words, the situation may not change in a short term period of time. 

The Assertive Stance Triggers a Sell – Off Action

The super-assertive stance done by Beijing to handle the Coronavirus resulted in a sell-off in Chinese stocks. That also undermining the exchange rates of the yuan and Australian dollar. 

The AUD/USD pair is now slumping at its lowest range since March 16. Meanwhile, the USD/CNH has touched a high record since November 2020 or two years ago 

China's alarming coronavirus situation and fears over a wider lockdown in Beijing are roiling the financial markets. The USD broke even higher and the AUD underperformed most major currencies.

The Hawkish Policy Made by The fed is Unbeatable 

An analyst note from Westpac today also revealed that The dollar index rose further remains a good bet. The China's growth risks are increasing as authorities stage an aggressive COVID campaign.

It was also caused by the conditions around Ukraine which remain volatile, and the Fed's speech which was hawkish. A series of Federal Reserve officials last week confirmed a potential 50 basis point rate hike.

That was stated at the next FOMC meeting early next month, including the Fed Chairman Jerome Powell. The solid U.S. economic data brought a good impact for these conditionS. 

Furthermore, the Fed's current hawkish policy direction has not been matched by any major central bank as well because of that solid release. This information is highlighted by most analysts and participants.

The UK Economic Data is Flushing and Shaking a Rate Hike Expectation 

The Bank of England (So-called the BEO) is also likely to raise their interest rates by 50 basis points next month. However, the UK economic data is flushing right now. 

That result really shakes the market confidence over those expectations. GBP/USD has continued its decline since last week and until now it has slumped near the bottom end of the candle since September 2020.

Elsewhere, Opening the beginning of the week, the rupiah plunged deeper versus the US Dollar. When this news was released at the beginning of the European session on Monday (25/April), the rupiah exchange rate was already at the level of 14465.

It experienced a drop of 0.75% from the daily opening level. Some analysts argue that the movement of the rupiah today has related to several global factors happened lately. 

The Aggresively Rate Hike Can Be the Cause 

According to a Money Market Analyst Ariston Tjendra, the slump in the rupiah is the impact of market participants' concerns about the decision made by the America’s Central bank. 

It is known that they are raise the aggressive benchmark interest rate. This led to a strengthening of the USD which eventually resulted in a decline in the value of the rupiah.

The rise in market expectations was triggered by statements made by a number of U.S. central bank officials including Governor Jerome Powell. They supported a 50 basis point increase in the benchmark interest rate at the next meeting to combat inflation.