Dollar rises as haven amid growth worries

The dollar rose against most of its peers Tuesday as global growth worries swept equity markets and pushed oil prices lower, boosting demand for the safe-haven US currency.

The euro sharply reversed against the greenback, after hitting $1.1616, its highest level since last August. By around 2100 GMT, the euro traded at $1.1507, down from $1.1535 at the same time Monday.

"It seems the dollar is in a bit of recovery mode," said Vassili Serebriakov of BNP Paribas.

"The market's not very comfortable pushing the euro dollar much above 1.16 for now," he said, citing persistent uncertainties about European and US monetary policies.

In the United States, the Federal Reserve seems wary about raising interest rates again after a December move, while in Europe there are doubts that the European Central Bank will provide further stimulus to the tepid eurozone economy.

The dollar also appeared to get a lift Tuesday from remarks by the Atlanta Fed president, Dennis Lockhart, that left open the door to a Fed rate hike in June, although he has no vote on the matter.

"The real question is: does any of the price action at the beginning of this week actually matter? That's a difficult question to pose during a time of heightened market stress," said Christopher Vecchio of DailyFX.

Meanwhile, the Australian central bank surprised markets with a quarter point cut in interest rates to a historic low of 1.75 percent, citing concerns about low inflation.

The announcement by the Reserve Bank of Australia pushed the Australian dollar sharply lower, to 75 US cents from 77 US cents earlier in the day.

"The Fed's reluctance to normalize policy and signs of global economic slowdown have clearly changed the calculus for RBA which as recently as last month appeared to be content to keep rates stationary for the foreseeable future," said Boris Schlossberg of BK Asset Management.