The U.S. dollar is poised for its worst year since the onset of the pandemic as Wall Street bets the Federal Reserve is set to lower interest rates after safely reining in prices.
After being whipsawed by false starts calling for the end of the Fed’s rate hiking regime, a Bloomberg gauge of the greenback is down nearly 3% since January in the steepest annual drop for the U.S. currency since 2020.
Much of the decline materialized in the fourth quarter on growing wagers that the Fed will sharply loosen policy next year as the U.S. economy slows. That dents the dollar’s appeal as other central banks may keep their rates higher for longer.