The Fed is priced to be the most dovish among advanced nation central banks in 2024, with traders anticipating at least 100 basis points - or 1 percentage point - of interest-rate cuts from the current 5.25% to 5.5% range, according to Deutsche Bank Research.
While we still envision the U.S. performing relatively well next year vis-Ã -vis other major economies, the prospect of an eventual economic landing and corresponding Fed easing, even alongside easing elsewhere, should provide broad relief to currencies across the globe," Bank of America's strategists said.
A weaker dollar often becomes a tailwind to risk assets, including bitcoin, as occurred in the second half of 2020 and early 2021. The greenback is a global reserve currency, playing an outsized role in global trade and non-bank borrowing. When the dollar strengthens, it causes financial tightening worldwide, disincentivizing risk-taking. The opposite is true when it weakens.
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