2023-12-30 10:10:24
The dollar rose yesterday, Friday, but it is on its way to ending the year 2023 with its first annual loss since 2020 once morest the euro and a basket of currencies, thanks to market expectations that the Federal Reserve (the US central bank) will begin reducing interest rates next March at the earliest.
Questions for 2024 will center around when the US Central Bank will start lowering interest rates, and whether the first interest rate cut will aim to avoid excessive tightening of monetary policy as inflation declines, or due to a slowdown in US economic growth.
Since the US Central Bank launched its course to tighten monetary policy in early 2022, expectations related to the amount of need to raise interest have been a primary driver for the dollar.
But with continued economic data indicating a continued slowdown in inflation in the United States, investors’ focus has shifted to when the central bank might start cutting interest rates.
These expectations gained momentum following the tendency toward easing at the central bank’s monetary policy meeting this December.
The dollar rose once morest a basket of currencies by 0.13% to 101.32 points yesterday, Friday, rising from the lowest level in 5 months at 100.61 recorded last Thursday.
However, the dollar index is heading to record a loss of 2.10% during this year, and a decline of 4.62% during the current quarter, which is the worst performance in a year.
Performance of other currencies
- The euro is on track for a 3.04% gain this year, its first positive year since 2020.
- The British pound is on track for an annual gain of 5.39%, its best performance since 2017.
- The dollar is expected to post an annual gain of 7.56% once morest the Japanese yen, as the Japanese currency remains under pressure from the Bank of Japan’s ultra-loose monetary policy.
- The Swiss franc is one of the best performing currencies this year, as the US currency lost 8.99% once morest it, which is the worst decline since 2010.
- In cryptocurrencies, Bitcoin is on track to gain 154% this year.
Oil markets
Oil price futures lost more than 10% in 2023, which witnessed geopolitical turmoil and concerns regarding oil production levels among major producers around the world.
Brent crude futures fell 0.14% to reach $77.04 at settlement yesterday, Friday, while US West Texas Intermediate crude futures fell 0.17% to reach $71.65 at settlement.
Both contracts fell by more than 10% in 2023, ending the year at their lowest levels since 2020, when the Corona pandemic undermined demand and led to a decline in prices.
Brent crude rose by 10% and West Texas Intermediate crude rose by 7% last year, supported by concerns regarding supplies following the Russian-Ukrainian war.
A Archyde.com survey of the opinions of 34 economists and analysts expects the average price of Brent crude to reach $82.56 per barrel in 2024, amid expectations that a decline in global growth will limit demand, while ongoing geopolitical tensions may support prices.
Analysts also questioned the ability of the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC Plus) to adhere to the supply cuts they pledged to support prices.
OPEC Plus is currently reducing production by regarding 6 million barrels per day, which represents 6% of global supplies.
Meanwhile, the war in the Middle East has raised concerns regarding possible supply disruptions in the past few months, which are expected to continue into 2024.
1703932193
#dollar #oil #suffer #losses #Economy
