At Any Rate Global FX: USD ends 2024 with a bang
7 snips
Dec 20, 2024 The hosts dive into the recent fluctuations of the U.S. dollar, spotlighting key economic indicators like the rising U.S. PMI. They analyze the Federal Reserve's hawkish signals and their impact on the bond market. A discussion on monetary divergence reveals how global policies affect the dollar's strength, especially in relation to the cautious Bank of England. The challenges with Nordic Bank and Riggsbank highlight currency stability issues. Lastly, they navigate the Bank of Japan's dovish stance impacting the yen's performance.
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USD Strength
- The US dollar ended the week sharply higher, influenced by better-than-expected economic data and the FOMC meeting.
- The market was surprised by a less dovish Fed, causing a shift in yields and dollar strength.
Hawkish Fed
- Several hawkish elements at the Fed meeting included a no-cut dissent and hawkish tales to the 2025 projections.
- Chair Powell's mention of incorporating incoming administration's policies into forecasts suggests potential continued momentum in forecast revisions.
Bank of England's Cautious Stance
- The Bank of England maintained cautious guidance with a surprising 6-3 vote split in favor of a hold.
- This suggests increasing awareness of downside growth risks amidst inflation persistence, potentially impacting sterling.