FOREX-Dollar on track for best year since 2015
* The USD declines on the last day of 2021, but is expected to reach an annual gain of almost 7%
* C $ ends the year at the same level, making it the best performing against the USD
* Turkish lira hammered in 2021, down around 44%
By John McCrank
NEW YORK, December 31 – The dollar index plunged into calm holiday trading on Friday, but was expected to end 2021 with a gain of nearly 7%, with investors betting the US Federal Reserve to hike rates earlier than most other major economies in a context of runaway inflation. by COVID-19 recovery initiatives.
The dollar index, which measures the greenback against six major rivals, fell 0.289% to 95.729.
(Graph: world currencies against the dollar in 2021 http://tmsnrt.rs/2egbfVh))
Set for its best year since 2015, the dollar was supported by an improving U.S. economy and persistent inflation that led to a hawkish turn by the Fed, which is now expected to start raising interest rates as early as March.
The major currencies’ best performance against the dollar in 2021 was the Canadian dollar, which was roughly stable for the year, helped by expectations that the Bank of Canada will begin to tighten monetary policy as early as January.
The worst performance against the greenback among the majors was the Japanese yen, which is down around 10% this year.
The euro, which is the largest weight in the dollar index, lost just over 7% in 2021, with the European Central Bank (ECB) “sticking to ultra-dovish monetary policy parameters while as the Fed steps up its decline and looks to hike, âScotiabank analysts said in a note to clients.
“We expect the weakening of the common currency to continue next year to the 1.10 mark and possibly beyond, as headwinds remain firmly in place, where only luck (very unlikely) that the ECB increases in late 2022 / early 2023 possibly providing some support, “they said.
The euro fell around 6% on the year against the pound sterling, as appeasing concerns in Britain over the economic impact of the pandemic boosted the British currency, analysts expected to more Bank of England rate hikes in 2022.
While the pound sterling was at its highest level against the euro since February 2020, it was down just over 1% against the dollar for the year.
The biggest laggard of the year, although not considered a major currency, was the Turkish lira, which lost about 44% against the dollar in its worst year in two decades, battered by the soaring inflation and the Turkish government’s unorthodox monetary policy.
On Friday, the euro was up 0.33% to $ 1.1362.
The British pound rose 0.21% to $ 1.3527.
The yen lost 0.03% to 115.075 per dollar.
The Turkish lira rose 0.98% to 13.1835 per dollar.
In cryptocurrencies, bitcoin rose 1.66% to $ 47,931.97 and was expected to end the year with a gain of around 65%, but well below its November high of $ 69,000.
(Edited by Jason Neely)