Singapore - Saba:
The dollar strengthened on the last trading day of 2024 and is set for big gains for the year against most currencies as investors brace for lower U.S. interest rate cuts and the policies of President-elect Donald Trump’s incoming administration.
The dollar’s strength, supported by higher U.S. Treasury yields, has pushed the yen toward its lowest levels since July, when Japanese authorities last intervened. The yen was at 157.02 against the dollar on Monday, heading for a 10 percent decline for 2024, its fourth straight year of declines against the greenback.
Japanese markets will remain closed for the rest of the week, and with most markets closed on Wednesday for the New Year holiday, trading volumes are likely to be very light.
The dollar index, which measures the greenback against six major currencies, was at 108.06, not far from a two-year high touched this month. The index has risen 6.6 percent in 2024 as traders scale back bets on a big rate cut next year.
The prospect of higher U.S. interest rates for longer weighed on most currencies, especially those in emerging markets, as traders fret about the wide spread in interest rates between the United States and other economies.
The euro is on track to fall 5.7 percent against the dollar this year, with traders expecting the European Central Bank to cut more than the Federal Reserve.
On Tuesday, the single currency was steady at $1.04025, but remained close to a two-year low of $1.03315 touched in November.
The Bank of Japan kept interest rates steady at its meeting this month, with Governor Kazuo Ueda saying the bank was studying more data on wages next year and waiting for clarity on the new U.S. administration’s economic policies.
The pound was little changed at $1.2545 in early trade, on track for a 1 percent decline in 2024.
The Australian and New Zealand dollars remained near two-year lows on Tuesday. The Australian dollar was last trading at $0.62155 and is expected to decline 8.7 percent this year, its weakest annual performance since 2018.
The New Zealand dollar was at $0.5637 and is expected to decline by about 11 percent in 2024, its weakest performance since 2015.
In terms of cryptocurrencies, Bitcoin rose to $92,370, well below the record high of $108,379.28 it recorded on December 17. However, the world's most famous and largest cryptocurrency is heading for a significant increase of 117 percent during the year.
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