The US Dollar Holds Steady, Euro Continues to Weaken
On December 26, 2024, the US Dollar maintained its strength against major currencies, particularly the Euro. The US Dollar Index, which measures the greenback's value against a basket of six major currencies, rose 0.2% to 106.75, nearing its three-week high.
The stability of the US Dollar is bolstered by expectations that the Federal Reserve (Fed) will continue to keep interest rates high in the near future to curb inflation. Meanwhile, the Euro faced downward pressure after economic data from the Eurozone showed a decline in business activity, with the Purchasing Managers' Index (PMI) falling to 48.3 in December from 49.5 in November. This marks the third consecutive month below the 50 threshold, indicating economic contraction.
Additionally, the British Pound dropped 0.3% to $1.2652 after data revealed that the UK economy contracted by 0.1% in the third quarter, heightening concerns over the country's economic outlook.
In Asia, the Japanese Yen weakened by 0.1% to 153.70 yen per US Dollar following the Bank of Japan's decision to maintain its ultra-loose monetary policy despite rising inflationary pressures.
Overall, the US Dollar continues to be supported by a positive economic outlook and the Fed's tight monetary policy, while other currencies face challenges due to weak economic data and loose monetary policies.