Dollar Dominance: A Year-End Currency Report

The U.S. dollar shows firm strength as the year ends, supported by rising Treasury yields and fewer anticipated rate cuts. This has affected global currencies, with the yen at its lowest since July and the dollar index near a two-year high. Markets react cautiously to Trump's economic policies.

As the year draws to a close, the U.S. dollar remained strong, positioning to achieve substantial gains in 2024 against various global currencies. This trend is bolstered by fewer expected rate cuts and the forthcoming Trump administration's economic strategies.

The dollar's rise has been supported by increasing Treasury yields, pushing the yen towards its lowest levels since July. On the last trading day, the yen was at 157.02 per dollar, on track for a 10% decline in 2024, marking a fourth consecutive year of depreciation against the dollar.

Amid this flux, the dollar index remained steady at 108.06, close to its two-year peak, as traders adjusted their expectations for interest rate cuts. Analysts, including those at Goldman Sachs, speculate on potential rate cuts from the Federal Reserve, while deliberating the economic impacts of Trump's policies.

(With inputs from agencies.)