Dollar hovering for Strong Annual Gain
While late trading is expected today, the U.S. Dollar is hanging to end out the year more than 12% higher against a biased basket of its major peers, the strongest gain in nearly 10 years and probable, consequently to industry analysts, a clear indication of what investors are expected to see in the coming year.
The last time the greenback performed so splendidly was in 2005, with a then gain of almost 13%, and this is only the third time in as various decades when the Dollar has valued by 10% or better. The reason for the increase, of course, is the departure in the path of the Federal Reserve relative to most of its major peers, particularly, though, the European Central Bank and the Bank of Japan, both of which are hovering to embark on substantial stimulus efforts to shore up a struggling market.
As observed at 7:59 am (GMT) in London, the EUR/USD was trading at $1.2155, a quite steady pace, while the USD/JPY was trading at 119.645 Yen, a 0.14% gain and on track for the Dollar to achieve more than 13%. The U.S. Dollar Index, which tracks the greenback’s value against its peers, stood at 89.979 DXY.
A Look Ahead
Traders will be observing closely data from the U.S. in the coming year, to verify the timing of a possible Fed rate hike; what will offer the surest signs will be the upcoming release of Federal Reserve minutes. Recent economic data has supported a decision for financial tightening, and unless the unexpected occurs, analysts believe that the first interest rate hike should happen by the mid-point of 2015.