LONDON: The US dollar climbed to a two-year high versus its rivals on Monday and was on track for its single biggest daily gain in more than six weeks as a wave of risk aversion swept through global markets, boosting the greenback’s safe haven appeal.

With war in Ukraine entering a third month and the lockdown of 25 million people in Shanghai about to enter a second month, investor sentiment was fragile amid worries that climbs in consumer prices will lead to rapid global interest rate rises. Against a basket of its rivals, the dollar gained 0.6% in early London trading to 101.62, a level it last tested in March 2020 and on track for its biggest daily rise since March 11.

“The week is starting with a firmly negative tone in global markets, which are discounting a combination of a) many central banks accelerating their tightening plans, b) Russia and Ukraine moving further away from a diplomatic solution, c) China’s Covid crisis which is forcing a re-rating of growth expectations in the region,” ING strategists said in a note.

The euro’s tiny gains after news of French President Emmanuel Macron’s comfortable election victory over far-right rival Marine Le Pen quickly dissipated, with the single currency down 0.8% at $1.0729. Commodity currencies were singled out for special punishment as the dollar soared, with the Australian dollar and the New Zealand dollar leading losers.

Back-to-back: Rupee registers massive loss against US dollar

The Aussie, which was one of the biggest gainers in currencies in the first quarter of 2022 thanks to surging commodity prices, fell widely.

It weakened more than 1% against the US dollar and fell by a similar margin versus the Swiss franc.

Hawkish comments by various policymakers last week also raised the risks of aggressive policy tightening by global central banks.

Money markets expect the Fed to raise interest rates by a half point at the next two meetings and the European Central Bank to raise interest rates by 25 bps in July.

China’s yuan fell to a one-year low, extending losses after posting its worst week since 2015, as investors fret about the worsening economic growth outlook due to strict COVID-19 measures and lockdowns across the country.