He US dollar was on track to post a yearly gain against almost all major currencies this Tuesday, while the japanese yen was among the biggest losers, as the prospect of the Federal Reserve (Fed) maintain higher interest rates than its peers led the US currency to dominate its rivals.
Traders have braced for the US central bank to take a slow and cautious approach to further rate cuts next year, as the inflation remains above the Fed’s 2% annual target, as reported by Reuters.
At the same time, analysts also expect that the president-elect Donald Trump introduce policies including business deregulation, tax cuts, tariffs and clampdown on illegal immigration, to boost growth and increase price pressures next year.
This has increased the yields of US treasury bonds and has strengthened demand for the US currency. “Yields in the United States have been adjusted upward to take into account the potential inflationary impact of the incoming Trump administration’s policy agenda, which includes tariff increases, a stricter immigration policy and maintaining a loose fiscal policy “, said Lee Hardmansenior currency analyst at MUFG.
The dollar index rose 0.18% on the day to 108.24, on track for a 6.8% annual gain. Trading volumes were thin on Tuesday before the Christmas holiday. New Year on Wednesday.
On the other hand, the yen is heading towards its fourth annual loss against the dollar, because it suffers a wide interest rate differential between Japan and USA. Analysts expect the Japanese currency to receive support from further easing by the Fed and an increase in interest rates by the Bank of Japan. Until then, traders are also keeping an eye on intervention from Japanese authorities, who have stepped in to support the currency several times this year.
The dollar was last up 0.06% at 156.93 yen and was close to an 11.2% annual gain. Likewise, the euro fell 0.24% to $1.0382 and is headed for a 5.7% annual decline, with traders expecting the European Central Bank be more severe with its cuts than the Fed.
The pound sterling weakened 0.18% to $1.253 and was on track for a 1.4% decline in 2024, the strongest performance of any major currency against the dollar this year. He Australian dollar and the new zealand kiwi They were trading near their two-year lows. The Australian dollar was headed for a drop of around 8.8% this year, its weakest annual performance since 2018. The kiwi is forecast to see a drop of almost 11% in 2024, its weakest performance since 2015.
Source: Ambito
I am Pierce Boyd, a driven and ambitious professional working in the news industry. I have been writing for 24 Hours Worlds for over five years, specializing in sports section coverage. During my tenure at the publication, I have built an impressive portfolio of articles that has earned me a reputation as an experienced journalist and content creator.
