Dollar makes strong start to 2023 after months-long slump | Business

The Bloomberg spot index fell 6.8% between October and December as traders slashed long-dollar positions, its worst quarterly performance for more than a decade. While Yu sees further weakness, he’s"highly skeptical" that the Federal Reserve can cut interest rates this year, which could help temper a longer-term drop.

Traders will scour new data this week for clues on the state of the US economy. Signs were building last year that an aggressive cycle of rate hikes was starting to bring down red-hot inflation, though wage gains remain strong, suggesting higher rates for longer. The Australian dollar led losses against the greenback, down 1.4% to 0.6707. The yen bucked the trend to advance, reflecting bets on tighter policy from the Bank of Japan after its surprise December decision to tweak its yield curve control settings.

The currency pared gains in European hours to trade up 0.2% at 130.59, after earlier appreciating nearly 1% to the strongest since early June. With Japanese financial markets still shut for new-year holidays, currency flows doubled since the London open, according to Ian Tew, head of G-10 currency spot trading for EMEA at Barclays Plc.

"We’re looking at an uncertain 2023 and many macro themes will dictate market narratives — today feels like an unwind of short term December positions, rather than anything fundamental to start the year," Tew said."The overwhelming flow has been for yen calls in the option space, but we have also seen dollar demand from hedge funds."In times of uncertainty you need journalism you can trust.

_Business I don’t get it. The Americans are HEAVILY in debt and they are printing skyscraper high money notes to cover their spending and debt. Sorry, Quantitative Easing, as they call it. All these things my economics education taught me lead to a worthless currency. Why is $ stronger?

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