By Ankur Banerjee

SINGAPORE (Reuters) – The dollar was firm on the last trading day of the year, poised to clock strong gains in 2024 against most currencies as investors braced for fewer U.S. rate cuts and the future policies of the Trump administration.

The dollar’s rise, fueled by rising Treasury yields, pushed the yen to its lowest level since July, when Japanese authorities last intervened. On Tuesday, it was at 157.02 per dollar, on course for a 10% drop in 2024, the fourth consecutive year of decline against the dollar.

Japanese markets are closed for the rest of the week, and with most markets closed on Wednesday for the New Year holiday, volumes are likely to be thin.

That left the , which measures the US currency against six other major units, at 108.06, not far from the two-year high it touched this month. The index rose 6.6% in 2024 as traders cut bets on deep rate cuts next year.

The Federal Reserve shocked markets earlier this month by cutting its interest-rate forecast for 2025 to a 50 basis point cut, from 100 basis points, wary of tough highs. inflation.

Goldman Sachs strategists, despite expecting three rate cuts from the Fed next year, are confident that inflation will still fall.

“We see the risks to interest rates from the policies of the second Trump administration as more two-sided than many had imagined,” they said in a note.

The dollar was also boosted by expectations that President-elect Donald Trump’s policies of looser regulation, tax cuts, tariff hikes and tighter immigration will be both pro-growth and inflationary and keep yields high. US.

“Although the markets’ initial reaction to Trump’s re-election to the White House in November was euphoric, they now appear to be more cautiously analyzing the priorities of the incoming administration,” Gary said. Dugan, chief executive officer of the Global CIO Office.

DOLLAR GIVES SHADOW

The possibility of US rates staying higher for longer has put a dent in most other currencies, especially in emerging markets as traders worry about high interest rates. differences between the United States and other economies.

The euro is set for a 5.7% decline against the dollar this year, with traders expecting the European Central Bank to be sharper in its cuts than the Fed. On Tuesday, the single currency was steady at $1.04025, but remained close to the two-year low of $1.03315 it touched in November.

In what turned out to be another tumultuous year, the yen broke multi-decade lows in late April and again in early July, sliding to 161.96 per dollar and prompting interventions from Tokyo. .

It then touched a 14-month high of 139.58 in September before paring gains and is now back near 157, with traders watching for signs of intervention from Tokyo.

The Bank of Japan held interest rates steady at this month’s meeting, and governor Kazuo Ueda said the central bank was examining more data on next year’s wage momentum and awaiting clarification on economic policies. in the new US administration.

A Reuters poll taken earlier this month showed the BOJ could raise rates by the end of March and interest rate markets were pricing in just a 41% chance of a January rate hike. .

Sterling was little changed at $1.2545 in early trade, on course for a 1% fall in 2024.

The risk-sensitive Australian and New Zealand dollars were tentative on the day, remaining near their two-year lows. Last traded at $0.62155, it is set to fall 8.7% this year, the weakest annual performance since 2018. (AUD/)

At $0.5637, it is poised for a decline of nearly 11% in 2024, the slowest performance since 2015.

Among cryptocurrencies, bitcoin rose to $92,370, well below the record high of $108,379.28 it touched on December 17. The world’s most popular and largest cryptocurrency is set for a bumper 117% year-to-date increase.