The American Dollar had dipped against most major and emerging market currencies in final day of 2021, however, the US Dollar Index (DXY) measured against a basket of six major currencies had notched a 7.0 per cent in yearly gains as investors’ bet on a hawkish turnaround in US Federal Reserve’s monetary policy since Q3, 2021 alongside the US Fed’s December 14-15 policy meet that had signalled at least three rate hikes each in 2022 and 2023, had helped the greenback post its strongest annual gain since 2015.
Nonetheless, although the US Dollar had scored the best yearly percentage gain in more than half a decade on Friday, investors continued to stay cautious amid a year-end profit-taking wave. Nevertheless, the American currency had been fleshed up by an improvement in economic outlook since March, when the Biden Administration had decided to accelerate the nation’s vaccination program, which eventually had led to a robust reopening of US economy that fared utterly well for US Dollar.
Besides, a robust build-up in price pressures across the country with a lingering supply chain constraint had prompted investors to cash in on a hawkish turnaround in US Fed’s monetary policy.
Dollar drops in final day of 2021, but logs largest yearly gain since 2015
Citing statistics, in the day’s FX market wind down, the US Dollar Index measured against a basket of six major currencies, edged 0.28 per cent lower to 95.72.
Canadian Dollar had been the best-performing major currency against its American peer, mostly beefed up by a fourth-quarter bull-run in crude oil prices, while Japanese Yen had fallen by the most among major currencies, tumbling as much as 10 per cent over the year.
The bloc’s common currency euro faltered 7 per cent in the year, while British Pound had closed out the day just a notch shy of 1 per cent against its American peer. Among emerging market currencies, long-cherished Turkish Lira had been tottered by the most against the greenback, taking a header of as much as 44 per cent in the year.
Besides, on Friday’s late-afternoon US trading hour, euro gained 0.33 per cent to $1.1362 against its American peer, while British Pound rose 0.21 per cent to $1.3527. Safe-haven Japanese Yen edged 0.03 per cent lower to 115.075 yen per dollar, while Turkish Lira added 0.98 per cent to 13.18 Lira per Dollar.
Meanwhile, addressing to an ultra-dovish policy stance from the ECB (European Central Bank) that would more likely to pull the bloc’s shared currency lower over coming weeks, Scotiabank analysts wrote in a client note, “We see continued weakening in the shared currency next year to the 1.10 mark and likely beyond as headwinds remain firmly in place, where only the (highly unlikely) chance that the ECB hikes in late-2022/early-2023 possibly providing some support. ”