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January 7th, 2015, 12:43 pm | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The U.S. dollar concluded 2014 with a gain or almost 13 % against a basket of major currencies last week which was its strongest year since the 1997 and based on most major banks, just a prelude to an even further increase next year.

Traders favoured the dollar as this year’s winning bet which headed into the New Year and pushed the euro to a fresh 29-month low against the greenback of $1.2098, just below a closely monitored $1.21 technical level. Moreover, the dollar was able to hit a new 29-month high against the Swiss franc of 0.9944 in a rather narrow trade.

The dollar index which basically measures the greenback’s value against a basket of six major currencies was last seen 0.33 % at 90.288. The index was able to post its biggest yearly gain since in soared over 13 % back in 1997.

The winning trade has long been regarded in the dollar and traders are closing the year holding on to their respective dollar positions.

The stark contrast between the U.S. Federal Reserve’s path towards raising interest rates next year and looser monetary policies in the Eurozone and Japan will be the compelling force behind the dollar index’s rise to its highest in more than 8-1/2 years last week.

Still, it is not clear whether there will be additional gains in the first half of next year might pull the Fed off its plans to increase their rates. Furthermore, the turbulence might grow in developing markets, especially China. Political instability and upheaval might threaten Greece’s presence in the euro which added concerns over the global financial system.

Volatility is certainly more likely to go up and that the upward trend in the dollar would likely to persist. The euro last down 0.48 % against the dollar at $1.2098. The dollar was last up 0.52 % against the franc at 0.9939 franc. The dollar was likewise up 0.28 % against the yen at 119.79 yen.

Sterling was an exception and was last up 0.17 % against the dollar at $1.5585. On Wall Street, major indexes were on track to close out 2014 slight off record levels with the benchmark S&P 500 stock index last down at 0.86 %.

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