The greenback begins 2025 displaying lasting energy

3:54 p.m. ET – The greenback maintains its early beneficial properties, with ICE’s DXY indicator nearing the 110 mark. Analysts hyperlink the buck’s energy to expectations of a pause in rate of interest cuts by the Fed, which might be lengthy relying on the insurance policies that the brand new Trump administration implements. Treasury yields stay excessive, regardless of tepid efficiency at present. Geopolitical tensions are additionally fueling demand for the perceived safety of the greenback, analysts say. The DXY and the broader WSJ Greenback Index are each at their highest ranges since late 2022. The greenback strengthens by about 1% in opposition to the euro and the pound sterling and rises barely in opposition to the yen . (paulo.trevisani@wsj.com @ptrevisani)

15:13 GMT – The greenback’s momentum extends into 2025, amid expectations that the US Federal Reserve will lower rates of interest lower than different central banks. Demand for {dollars} as a secure haven can be pushing the foreign money larger, writes Rania Gule of XS.com. Comparatively excessive US rates of interest, coupled with geopolitical tensions, imply that “the greenback is more likely to stay the world’s main foreign money, strengthening its near-term attraction”, says Gule. The ICE greenback index rises 0.3% to 108.981, its highest since late 2022, whereas the euro weakens 0.4% to a two-year low of $1.0301, based on FactSet . The greenback rises 1% in opposition to the pound sterling however falls 0.2% in opposition to the yen.(paulo.trevisani@wsj.com; @ptrevisani)

15:41 GMT – The pound sterling falls to an eight-month low in opposition to a a lot stronger US greenback. A robust US financial system and anticipation of inflationary insurance policies from President-elect Trump – together with tariff and tax cuts – after his inauguration means US rates of interest are anticipated to fall lower than elsewhere. “With the beginning of the yr, markets are focusing their consideration on Trump’s inauguration later within the month,” Ballinger Group analyst Kyle Chapman stated in a word. Sterling additionally falls after the UK Buying Managers’ Survey on manufacturing exercise was revised all the way down to contraction territory. The British pound fell 1.1% to a low of $1.2371, based on FactSet. (jessica.fleetham@wsj.com)

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