December 2024 Monthly Report

Read the Ballinger Monthly Report for December below.

The election presented the FX market with two very different paths: one of continuity with Harris, or one of radical shifts in economic policy with Trump. Trump 2.0 is the one it had to take. A wave of dollar appreciation and a two-year high in DXY was the result, as markets moved to price in higher inflation and spending in the US, and negative growth shocks in Europe.

This compounded the euro’s cyclical weakness, and the common currency briefly fell to its lowest since 2022 amid some weak PMIs and the looming collapse of the government in the second biggest eurozone economy, after already seeing Germany’s coalition fall apart. The yen was the only currency to beat the dollar in November, rising 1.6% as as rate hike bets grew for the December meeting.

In December, the focus moves from politics and back to the macro trends. Rate cutting cycles are set to continue for six central banks, with markets favouring 50bp moves in Switzerland and Canada, while the Bank of England is likely to hold steady and the Bank of Japan could opt to hike for a third time.