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The dollar inched higher with profits near 9% in 2015

The dollar inched higher on Thursday, with profits near 9% against the other major currencies on the last trading day of the year, reinforced by the deviating monetary policy viewpoint between the Federal Reserve and other worldwide central banks. 

One of the major market factors in the growth of the dollar in 2015, was the expectation of the interest rates rise by the US Federal Reserve for the first time. The Fed raises interest rates by 0.25% points, its first increase since 2006 and further rate increases are expected in 2016.

Furthermore, the greenback was boosted by the continued loose monetary policy of the European Central Bank and the Bank of Japan. As a result, with higher interest rates the dollar became more attractive to yield-seeking investors.

The single currency fell to its lowest in a week on Thursday against the dollar, ended the year with 10% drop for a second straight annual decline.

The dollar inched up 0.4% against the Japanese currency for the year, the dollar's fourth in a row yearly gain against the yen. On Thursday, the dollar hit two-month lows against the yen, dropping to 119.99. 

The dollar was last at 0.9993 against the Swiss franc after earlier rising to a three-week high of 1.0019. The dollar ended the year with gains of 0.7% against the franc, the second successive yearly gain.

The Australian dollar ended the year down 11% against the greenback, the third year of losses, while the New Zealand dollar lost 12%. The Canadian dollar was down 16%, its second worst year on record after falling 18.6% in 2008.

As a result of the continuous falls in the commodity prices, all commodity linked currencies ended 2015 sharply lower. 

On Thursday, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, climbed up to a more than one-week high of 98.75. The index completed the month down 1.46%, the first monthly decline since August, but ended the year with gains of 8.96%.

In the week ahead, the highlights opening 2016, is Friday’s U.S. Non-Farm Payrolls for December, as well as reports on U.S. manufacturing and service sector activity. In addition,Tuesday’s euro zone inflation report will also be in focus.


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