Dynamic Currency Shifts Amid Economic Policy Changes

The U.S. dollar strengthens while the Japanese yen declines as traders forecast robust U.S. economic growth affecting Federal Reserve's rate strategy. The euro struggles near lows. Global markets react to policy shifts, with investors bracing for potential yield changes and inflation under President-elect Donald Trump.

The U.S. dollar is projected to notch an impressive nearly 7% annual gain, while Japan's yen is headed for its fourth consecutive year of losses. This comes as traders anticipate strong U.S. growth, discouraging the Federal Reserve from making rate cuts before 2025.

The yen has depreciated by 5.5% against the dollar this month, and a significant 11.8% throughout 2024. Jerome Powell, Fed Chair, stated that the U.S. central bank would be cautious regarding future rate reductions after the recent quarter-point decrease.

Globally, President-elect Donald Trump's policy proposals, including tax reductions and tariff hikes, are viewed as both pro-growth and inflationary, further influencing global markets. Meanwhile, the Bank of Japan and the European Central Bank are expected to maintain their accommodative monetary policies.

(With inputs from agencies.)