Dollar Rises as Fed Rate-Cut Rethink Sparks Best Year Since 2015
The US dollar has seen its strongest yearly gain since 2015, driven by a robust economy and changing Fed policies
US, Dollar, Federal Reserve, Interest Rates, Trump, Economy
New York: The US dollar is on a roll! It just wrapped up its best year since 2015, thanks to a strong economy and some interesting moves from the Federal Reserve. With President Trump’s tax cuts and tariffs, it looks like interest rates will stay high for a while.
The Bloomberg Dollar Spot Index hit its highest point since November 2022, climbing nearly 8% this year. Traders are feeling optimistic, especially since the economy has been surprisingly resilient. This has led them to rethink how much the Fed might cut rates.
Analysts think the dollar could keep climbing into early next year. The Fed has been cautious about cutting rates, unlike other central banks that might ease up more quickly. This has made the US a more attractive place for investors, boosting the dollar even more.
In 2024, the dollar gained against all major currencies, with the New Zealand dollar, Norwegian krone, and Japanese yen taking the biggest hits. Currency strategist Jayati Bharadwaj believes that many of Trump’s policies will keep the dollar strong early next year.
However, there are some mixed feelings about how much further the dollar can go. With its recent gains, some experts think the momentum might slow down. Sarah Ying from CIBC Capital Markets mentioned that most of the Fed’s plans are already factored into the market, so the dollar might lose some steam later on.