The US currency strengthened against the euro and the pound, due to higher growth prospects.
He global dollar rose to a two-year high on the first trading day of 2025, riding on strong gains last year on expectations that the growth American will outperform its peers and maintain interest rates relatively high.
He dollar index —which measures the performance of the greenback in relation to a basket of six other currencies of international relevance— rose 0.77% and stood at 109.38; at the same time that the euro fell 1.01% to $1.025, its lowest level since November 2022.
The pound sterling, which held up better than most major currencies against the dollar last year, fell 1.19% to $1.2368, its lowest level since April. Its decline accelerated after breaking the resistance around $1.2475.
Additionally, the dollar gained 0.47% to 157.61 japanese yen and hit a five-month high above 158.09 yen in late December, which could put pressure on the Bank of Japan, which is expected to raise interest rates early this year, but perhaps not imminently.
He chinese yuan languished at 14-month lows as concerns about the health of the world’s second-largest economy, the prospect of US import tariffs by the Trump administration and falling local yields weighed on investor sentiment. .
Eyes on Fed rates
Traders anticipate sharp interest rate cuts by the European Central Bank (ECB) in 2025, and markets expect at least four 25 basis point cuts, although they are not sure whether the United States Federal Reserve (Fed) I’m not going to do even two of those movements.
“It’s more of the same at the start of the new calendar year, with the dollar “continuing to advance in anticipation of Trump implementing friendly policies at the beginning of his term,” he told Reuters. Lee Hardman senior currency analyst MUFG.
It is expected that the policies of the president-elect of the United States, Donald Trump, not only boost growth, but also increase upward pressure on prices. That will lead to a Fed cautious about cutting rates too much, which in turn will prop up bond yields. United States Treasury bondsdemand for dollars will be boosted.
Weaker growth prospects outside the United States, the conflict in Middle East and the war between Russia and Ukraine They have also contributed to increasing the demand for dollars.
Source: Ambito
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