Dollar Heads for Worst Annual Performance Since 2003 on Rate Cut Bets
The US dollar is heading toward its worst annual performance since 2003, as investors increasingly bet that the Federal Reserve has room to continue cutting interest rates next year, even as some other central banks lean toward tightening.
The dollar continued to weaken in Asian trading, with strong US GDP data failing to alter monetary policy expectations, reinforcing market bets on two additional rate cuts in the coming year.
David Mericle, an economist at Goldman Sachs, said expectations point to two 25-basis-point cuts, bringing the policy rate to a range of 3%–3.25%, noting that risks are tilted toward further declines amid slowing inflation.
The dollar fell to a two-and-a-half-month low against a basket of currencies at 97.767 and is on track for an annual loss of about 9.9%, its largest since 2003.
The currency has seen sharp volatility this year, driven by the impact of tariffs imposed by former US President Donald Trump and concerns over the Federal Reserve’s independence.
Meanwhile, rival currencies posted strong gains, with the euro hitting a three-month high at 1.1806, while the Australian dollar, New Zealand dollar, British pound and Japanese yen also advanced.
The dollar continued to weaken in Asian trading, with strong US GDP data failing to alter monetary policy expectations, reinforcing market bets on two additional rate cuts in the coming year.
David Mericle, an economist at Goldman Sachs, said expectations point to two 25-basis-point cuts, bringing the policy rate to a range of 3%–3.25%, noting that risks are tilted toward further declines amid slowing inflation.
The dollar fell to a two-and-a-half-month low against a basket of currencies at 97.767 and is on track for an annual loss of about 9.9%, its largest since 2003.
The currency has seen sharp volatility this year, driven by the impact of tariffs imposed by former US President Donald Trump and concerns over the Federal Reserve’s independence.
Meanwhile, rival currencies posted strong gains, with the euro hitting a three-month high at 1.1806, while the Australian dollar, New Zealand dollar, British pound and Japanese yen also advanced.
