By Alun John
HONG KONG, April 25 (Reuters) - The dollar climbed on Monday as investors sought safety due to uncertainties over the global growth outlook, gaining ground even on the euro despite French President Emmanuel Macron's comfortable election victory over far-right rival Marine Le Pen.
The dollar index rose 0.2% to 101.3 testing last week's two-year peak of 101.33.
"With the French election out of the way the market is starting to focus on other worries. Stock markets are in the red this morning, and that risk aversion has generally benefitted the dollar, and this why the euro has been dragged a bit lower," said Sim Moh Siong, Currency Strategist, at Bank of Singapore.
"There are three big forces driving the markets and all are worries," he said, pointing to fears about whether the U.S. and global economy can withstand an increasingly hawkish Federal Reserve, worries about Chinese growth due to lockdowns to prevent the spread of COVID-19 and the commodity shock caused by the Russia-Ukraine war.
The euro fell 0.29% to $1.0778, after initially opening higher, and is not far from the two-year low of $1.0758 hit last week.
However it gained 0.12% against sterling, touching a one-month peak of 84.32 pence in early trade.
With 97% of votes counted, Macron was on course for a solid 57.4% of the vote, interior ministry figures showed. In his victory speech he acknowledged that many people had only voted for him only to keep Le Pen out, and he promised to address the sense of many French that their living standards were slipping.
Markets had worried that a Le Pen victory, which was not predicted by the polls, would lead to significant economic change in the euro zone's second-largest economy.
"Macron's clear victory is likely to reassure the markets that the European dynamic will continue," said Frederic Leroux, a member of the investment team at Carmignac.
Sterling fell 0.3% against the dollar to $1.28085, a fresh low since September 2020.
The pound has been hurt by last week's weak British retail sales and consumer-confidence data and Bank of England comments that signalled a possible slowdown in the expected upward movement of interest rates.
CHINA FEARS
China's yuan fell to a one-year low on Monday 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.
The People's Bank of China (PBOC) set the midpoint rate on Monday at 6.4909 per dollar prior to market open, the weakest since August 2021. In the spot market, both the onshore and offshore yuan, touched their weakest since April 2021.