{"id":110015,"date":"2024-12-31T14:40:25","date_gmt":"2024-12-31T10:40:25","guid":{"rendered":"https:\/\/noortrends.ae\/en\/?p=110015"},"modified":"2024-12-31T14:40:29","modified_gmt":"2024-12-31T10:40:29","slug":"us-dollar-slightly-lower-but-set-for-strong-annual-gains-in-2024","status":"publish","type":"post","link":"https:\/\/noortrends.ae\/en\/us-dollar-slightly-lower-but-set-for-strong-annual-gains-in-2024\/12\/31\/market-updates\/","title":{"rendered":"US Dollar Slightly Lower but Set for Strong Annual Gains in 2024"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>The US Dollar edged lower in early trading on Tuesday, reflecting thin year-end market activity. However, the greenback remains on track for significant gains in 2024, driven by the Federal Reserve&#8217;s cautious stance on interest rate cuts and expectations tied to the incoming Donald Trump administration.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Dollar Index:<\/strong> Down <strong>0.1%<\/strong> to <strong>107.830<\/strong> at 05:35 ET (10:35 GMT), just below its two-year high earlier this month. Year-to-date, the index is up nearly <strong>7%<\/strong>, with a <strong>1.5%<\/strong> gain in December.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Key Drivers of Dollar Strength<\/strong><\/h3>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Federal Reserve Policy:<\/strong>\n<ul class=\"wp-block-list\">\n<li>The Fed scaled back its projection for 2025 rate cuts, signaling just two 25 bp reductions instead of four forecasted in September.<\/li>\n\n\n\n<li>This stance boosted the dollar, supported by higher Treasury yields, including the 10-year yield, which hit a seven-month high last week.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Trump\u2019s Economic Policies:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Donald Trump&#8217;s election win has bolstered the greenback, with expectations of pro-growth policies such as looser regulation, tax cuts, and tariff hikes.<\/li>\n\n\n\n<li>These measures are also viewed as inflationary, reinforcing the Fed&#8217;s cautious approach.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Limited Trading Volumes:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Year-end trading is subdued ahead of Wednesday\u2019s holiday, with focus shifting to economic data later in the week, such as jobless claims and ISM manufacturing PMI.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Global Currency Highlights<\/strong><\/h3>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Euro (EUR\/USD):<\/strong>\n<ul class=\"wp-block-list\">\n<li>Slightly higher at <strong>1.0409<\/strong>, but down <strong>6%<\/strong> year-to-date.<\/li>\n\n\n\n<li>ECB\u2019s aggressive rate-cutting stance, paired with a slowing eurozone economy, continues to weigh on the euro.<\/li>\n\n\n\n<li>Potential trade tensions with the US under Trump\u2019s leadership add further downside risk.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>British Pound (GBP\/USD):<\/strong>\n<ul class=\"wp-block-list\">\n<li>Down <strong>0.1%<\/strong> to <strong>1.2539<\/strong>, with the UK&#8217;s manufacturing sector expected to remain in contraction.<\/li>\n\n\n\n<li>Economic stagnation and subdued growth have limited upside potential for the pound.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chinese Yuan (USD\/CNY):<\/strong>\n<ul class=\"wp-block-list\">\n<li>Up <strong>0.6%<\/strong> to <strong>7.3443<\/strong>, as China\u2019s manufacturing activity expanded for the third straight month in December.<\/li>\n\n\n\n<li>However, the slightly weaker-than-expected data dampened enthusiasm, with markets awaiting more fiscal stimulus clarity from Beijing.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Japanese Yen (USD\/JPY):<\/strong>\n<ul class=\"wp-block-list\">\n<li>Up <strong>0.1%<\/strong> to <strong>156.92<\/strong>, nearing a five-month high.<\/li>\n\n\n\n<li>The Bank of Japan remains hesitant to raise rates, maintaining its key interest rate at <strong>0.25%<\/strong>, further weakening the yen.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Outlook for 2025<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>US Dollar:<\/strong> Expected to retain strength amid persistent inflation concerns and a hawkish Fed.<\/li>\n\n\n\n<li><strong>Euro and Pound:<\/strong> Likely to face headwinds due to softer monetary policy and economic challenges in their respective regions.<\/li>\n\n\n\n<li><strong>Emerging Markets:<\/strong> Dollar strength could pressure emerging market currencies, particularly if global growth remains uneven.<\/li>\n<\/ul>\n\n\n\n<p>The interplay between central bank policies, geopolitical developments, and fiscal stimulus will shape currency movements as markets transition into 2025.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The US Dollar edged lower in early trading on Tuesday, reflecting thin year-end market activity. However, the greenback remains on track for significant gains in 2024, driven by the Federal Reserve&#8217;s cautious stance on interest rate cuts and expectations tied to the incoming Donald Trump administration. Dollar Index: Down 0.1% to 107.830 at 05:35 ET &hellip;<\/p>\n","protected":false},"author":9,"featured_media":94903,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6827,49,37,36],"tags":[6943,7987,6987],"class_list":["post-110015","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-daily-economic-reports","category-economic-reports","category-forex-markets","category-market-updates","tag-bostic","tag-cpi-data","tag-inflation"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/110015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=110015"}],"version-history":[{"count":2,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/110015\/revisions"}],"predecessor-version":[{"id":110017,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/110015\/revisions\/110017"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/94903"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=110015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=110015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=110015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}