December 31, 2024

“Markets are nearing the close of a strong year driven by a growing economy, solid consumer spending and strong jobs market. The Fed delivered three rate cuts in 2024 but is now adopting a more cautious stance heading into 2025 as inflation shows signs of rising again.”

Tim Hallinan – Trading Director

USD

The US Dollar Index remains near 108.00, closing flat on Monday but poised for its third consecutive monthly gain. US bond markets will close early on New Year’s Eve, while stock index futures are slightly lower following sharp declines in Wall Street’s main indices. Meanwhile, US Pending Home Sales rose by 2.2% in November, exceeding the 0.7% forecast and building on a 1.8% gain in October. In December, China’s NBS Manufacturing PMI stood at 50.1, while Non-Manufacturing PMI improved to 52.2 from November’s 50.

GBP

The Pound Sterling faces pressure from heightened geopolitical risks, including the prolonged Russia-Ukraine conflict and unrest in the Middle East. The GBP also weakened as traders adjusted their expectations for the Bank of England’s 2025 policy, now pricing in a 53-basis-point rate cut, up from 46 bps projected after the 19 December meeting, where the BoE held rates steady at 4.75% with a 6-3 vote split.

EUR

The Euro continued to slide in European trade on Tuesday, declining against the US dollar for a second straight session amid thin holiday trading. Speculation of a European Central Bank rate cut in January increased following comments by ECB President Christine Lagarde, raising concerns over a widening eurozone-US interest rate gap. As 2024 concludes, the euro is on track for an annual decline, pressured by the dollar’s strength and economic challenges within the eurozone.

Markets

Markets have defied early-year expectations of a fading global stock rally, swift US rate cuts, a weaker dollar, and strengthening emerging market currencies. Instead, world stocks are set to post a second consecutive annual gain of 16%, remaining resilient despite geopolitical and economic headwinds, including wars in the Middle East and Ukraine, Germany’s recession and political turmoil, France’s budget crisis, and China’s slowdown.

Main Economic Events (All Times CET)

2:30am: Chinese PMIs
3:00pm: US House Price Index

To learn more about Ballinger Group, please visit our website or our LinkedIn page.