Dollar hits record highs as Fed signals

The dollar has surged to its highest level in more than two years after the Federal Reserve signaled that monetary easing may slow next year. Bloomberg reported that the Bloomberg U.S. Dollar Spot Index rose 0.6% on Wednesday, hitting its highest point since 2022. The dollar is up about 7% for the year, suggesting it could end 2024 with its strongest performance since 2015.

Also read: Dollar strengthens on Japan uncertainty, US election expectations

President-elect Donald Trump’s pledge to impose tough tariffs on several U.S. trading partners further amplified the gains, adding momentum as the Federal Reserve deliberates on its path to cutting interest rates. The strong performance of the U.S. economy relative to other countries further supported the dollar’s appreciation.

In contrast, global central banks have been forced to slash borrowing costs in response to stalling economic growth. Brendan McKenna, currency strategist at Wells Fargo, predicts that the dollar could appreciate on average 5% to 6% against G10 currencies next year as monetary policy differences become more pronounced.

IndexBox data complements this outlook, underscoring the U.S. dollar’s ​​potential to have a significant impact on international trade dynamics. Wall Street strategists predict that while the dollar could peak in mid-2025, it could fall thereafter as global interest rate cuts revive economic expansion outside the United States.

Source: IndexBox Market Intelligence Platform