US dollar set for steepest annual loss since 2003
Shafaq News — New York
On Wednesday, the US dollar was on track for its worst annual performance in more than two decades, as investors bet the Federal Reserve will have room to cut interest rates further next year.
The dollar index fell to a two-and-a-half-month low of 97.767 and was heading for an annual loss of about 9.9%, its steepest decline since 2003.
In Asian trading, the US currency extended losses with a strong reading of US gross domestic product failing to shift expectations for easier monetary policy. Markets are pricing in two additional rate cuts next year.
David Mericle, chief economist at Goldman Sachs, said the outlook points to two 25-basis-point cuts that would take the policy rate to a 3% to 3.25% range, with risks skewed to the downside as inflation cools.
The dollar has swung sharply this year, pressured by the impact of tariffs imposed by US President Donald Trump and bouts of weaker confidence in US assets. Concerns about growing White House influence over the Fed have also weighed on the currency.
In contrast, the euro rose to a three-month high of $1.1806 and was up more than 14% for the year, on track for its strongest annual performance since 2003. The Australian dollar climbed to a three-month high of $0.6710, up 8.4% so far this year, while the New Zealand dollar touched $0.58475, up about 4.5%.
Sterling hit $1.3531, gaining more than 8% year to date, and the yen rose 0.4% to 155.60 per dollar.
