US dollar records its first loss on an annual basis since 2020‎

US dollar rose, Friday, December 29, but it is still on track to end the year 2023 with its first annual loss since 2020 against the euro and a basket of currencies, thanks to market expectations that the Federal Reserve (the US central bank) will begin… Interest rates will be cut in March at the earliest

Questions for 2024 will center around when the Federal Reserve will start lowering interest rates, and whether the first interest rate cut will aim to avoid excessive tightening of monetary policy as inflation declines, or due to a slowdown in US economic growth.

Since the US Federal Reserve launched its course to tighten monetary policy in early 2022, expectations related to the amount of need to raise interest have been a primary driver for the dollar.

But with the frequency of economic data indicating a continued slowdown in inflation in the United States, investors’ focus has shifted to when the central bank may begin cutting interest rates.

These expectations gained momentum after the easing tendency at the central bank’s monetary policy meeting in December.

The dollar rose against a basket of currencies by 0.13% to 101.32, rising from the lowest level in five months at 100.61 recorded on Thursday.

However, the dollar index is still heading to record a loss of 2.10% during this year and a decrease of 4.62% during the current profit, which is the worst performance in a year.

The euro fell 0.19% to $1.1040, hovering below the highest level in five months at $1.11395, which it reached yesterday, Thursday. The euro is heading towards achieving gains of 3.04% for this year, which is its first positive year since 2020.

The British pound rose by 0.08% to 1.2745 US dollars and is on its way to achieving annual gains of 5.39%, which is its best performance since 2017.

The dollar is expected to record annual gains of 7.56% against the Japanese yen, as the Japanese currency is still under pressure from the ultra-loose monetary policy adopted by the Bank of Japan.

The Swiss franc is one of the best performing currencies this year, as the US currency lost 8.99% against it, which is the worst decline since 2010.

Regarding cryptocurrencies, Bitcoin fell by 1.23% to $42,059, and is on its way to achieving gains of 154% this year.