The dollar index fell to ~101.43. The US Federal Reserve (Fed) is expected to begin cutting interest rates. However, the central bank authorities have not shared a tentative date or even a month for that matter. What further strengthens this belief is the fact that inflation rates are well controlled and inching closer to the established 2% interest rate.
The likelihood of an interest rate cut increases in 2024. Analysts have also estimated that the cut could come as early as March 2024. The Fed will make the final decision and the chances of a rate hike are becoming slim. The Japanese Yen continues its tour with stagnant movements on the graph. Currently dancing in the 140-145 range.
that much us dollar We are facing great challenges due to inflation. It was 3.1% in November and 3.2% in October this year. An initial attempt would be to lower the actual rate to less than 3% before attempting it. Next, the ongoing wars between Russia and Ukraine and Israel and Hamas are further impacting global trade. What we should not forget is that the Houthis are picking up speed in the Red Sea, forcing companies to take longer routes for higher prices.
Factors Affecting the US Dollar
The value of the US dollar could gain momentum in late 2024. Until then, the currency cannot avoid signs of struggle. For example, anticipated government changes will spur policy changes. If Joe Biden loses the next election, another leader could take over, paving the way for even more aggressive cuts.
- There is no end to the ongoing war. The defeat in Afghanistan created tensions in Asian markets and the American name became entrenched. Market sentiment took note to examine how things might play out in the future.
- Inflation is now under control in the way expected. The decline from 6.45% in June to 3.14% in November is still notable. But only to the extent that interest rate increases can be halted. For this reason, investment has not reached its peak.
- In addition, the U.S. Treasury yield is 3.8%, lower than 5.05% in mid-October this year. These figures are also true for 10-year bonds, raising concerns about improvement at the macro level.
The Japanese yen has been relatively stable for several days. Most of this is due to smooth liquidity and a stable political system. There are also hints that the Bank of Japan may ease monetary policy in 2024. Inflation in November was at the lowest level of 2.3%, making the risk lower than that of European countries.
The US dollar and Japanese yen are pegged at 142.36. The last time the yen was above 145 was on December 6-7, 2023. Low interest rates make it convenient to borrow currency and thus historically attractive and economical.
endless dollar struggle On the surface, it will only cool down in 2024. Current market opportunities lie in technological advancements. The United States will still work to balance its trade deficit. In 2022, it was recorded at $70.3 billion. Exports were approximately $118.5 billion, and imports were $188.8 billion.
Risks surrounding the US dollar and Japanese yen are aligned as the US tries to balance its trade with Japan. Additionally, calls to remove the U.S. dollar from bilateral trade between countries other than the United States are growing. it will affect Spend more dollars, especially when: usa forex broker. The yen remains stable Until then, the movement of the graph and the greenback find support.
conclusion
The Bank of Japan will aim to ease monetary policy going forward as inflation is well controlled. The United States has similar sentiments, except that there are bigger goals to be achieved in the coming months. The Japanese yen may remain stable. The US dollar will eventually find a way to cut interest rates.