Mercado Noticias
Dollar steady ahead of Fed minutes as China's yuan breaches key level - REUTERS
By Dhara Ranasinghe and Ankur Banerjee
Summary
- Fed minutes expected to show central bank divided on 2026 policy
- Dollar index poised for steepest annual drop in eight years
- China yuan breaches key level against dollar
LONDON, Dec 30 (Reuters) - The dollar was steady on Tuesday ahead of the release of the minutes from the Federal Reserve's December meeting, while China's yuan strengthened through a key psychological level against the U.S. currency.
End-of-year holidays thinned liquidity as traders anticipated the dollar could remain under pressure.
This year, it is set for its worst performance since 2017 with a fall of almost 10% .
Some analysts said the minutes from the Fed's December meeting, when the central bank cut rates, could reinforce expectations for further easing, while traders have priced in two more cuts for 2026.
EURO AND STERLING ARE ON TRACK FOR YEARLY GAIN
The euro was last at $1.1767, set for a yearly gain of almost 14%, while sterling fetched $1.3508 and was poised for an increase of 8% in 2025.
The dollar index , which measures the U.S. currency against rivals, headed for a 9.6% annual drop, its steepest decline in eight years due to Fed rate-cut bets, shrinking interest rate differentials against other currencies and concerns about fiscal deficits and political uncertainty.
It was last trading at 98.03, not far from last week's three-month lows.
MUFG strategists expect the dollar index to decline by 5% next year, noting the U.S. economy and the direction of monetary policy are likely to be the main drivers.
But others cited the stabilisation of the dollar in recent months, and limited scope for the Fed to cut rates much further.
"We think the dollar is going to range trade around current levels versus the key crosses," said Zurich Insurance Group's chief market strategist Guy Miller.
