Due to the low liquidity during the holidays, the U.S. dollar index fell on the last trading day of this year, and the weekly, monthly and quarterly lines closed in black. Even with a lackluster fourth quarter, the dollar index is on track for its best annual performance in seven years this year. The yen once fell below the 150 mark against the U.S. dollar this year, hitting a 32-year low. Although the trend was reversed in Q4, the performance this year is still down by nearly 14%, which is the worst in nine years.
In late New York trading on Friday (30th), the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, fell 0.32% to 103.50, down 0.8% on a weekly basis, 1% on a monthly basis and 7.7% on a quarterly basis. But it still rose about 7.8 percent for the year, the biggest annual gain since 2015.
In order to prevent soaring inflation, the Federal Reserve (Fed) has raised interest rates by 425 basis points since March, which has led to a strong rise in the US dollar. The interest rate hike in China is coming to an end, and the trend of the US dollar in Q4 has changed.
Adam Button, chief currency analyst at ForexLive, believes that the biggest question in 2023 is weak growth or stubborn inflation. Everyone is struggling. If growth is weak, the dollar will fall, and if inflation is high, the dollar will rise.
The euro rose more than 0.4% to $1.0706. Although Q4 soared more than 9%, it still fell 5.9% this year. Weak economic growth, the war in Ukraine and the Fed’s tough policy stance are the main reasons for the pressure on the euro this year.
Karl Schamotta, chief market strategist at Corpay, said: “Higher interest rates combined with stronger economic growth are helping money flow back into the euro area, but there are risks to both, especially if energy prices rise again, or if the ECB starts to become more aggressive. Not so hawkish.”
The pound rose about 0.2% to $1.2082, down 10.7% this year; the Australian dollar, considered a liquidity indicator of risk appetite, rose nearly 0.5% to $0.6810, down 6.4% this year.
The offshore yuan rose 0.7% to 6.9239 per dollar, its strongest since mid-September. The offshore yuan, which has lost nearly 1.2 percent this week, has surged 8.8 percent this year.
China announced this week that it would ease quarantine rules for incoming travelers after three years of strict lockdowns, but optimism about reopening has also been tempered by the severity of the domestic outbreak.
Jan Von Gerich, chief analyst at Nordea, said the reopening of China would be a source of market volatility, but should help boost global risk appetite should a positive economic impact do emerge.
The US dollar fell 1.4% to 131.11 yen against the yen. The weekly, monthly and quarterly lines closed in black, and Q4 fell by more than 9%. However, the Bank of Japan’s extremely dovish stance has still sent the yen down nearly 14 percent this year, its worst annual performance since 2013.
The dollar was steady against the Swiss franc, inching up nearly 0.2 percent to 0.9242 franc. The Swiss franc has lost about 1.3 percent this year.
In terms of cryptocurrencies, Bitcoin was reported at US$16,597 before the deadline, and has fallen by more than 64% so far this year. Ethereum is reported at US$1,198, which has fallen by about 67% this year.
As of about 6:00 Taiwan time on Saturday (31st) Price:
The dollar index was at 103.4970. -0.4638% The euro was trading at 1.0701 dollars to the euro. +0.3752% GBP/USD was trading at 1.2096 per pound. +0.3484% The Australian dollar is trading at 0.6816 Australian dollar (AUD/USD). +0.5903% The U.S. dollar was trading at 1.3542 Canadian dollars to the U.S. dollar. -0.0443% The dollar was trading at 131.12 yen per dollar. -1.4209%
