‘Barclays expects the USD to maintain its resilience and bullish momentum through 2025, driven by strong US economic momentum and market adjustments in the Fed’s rate expectations. President-elect Trump’s proposed trade and fiscal policies add further support, outweighing modest Chinese economic stimulus efforts.

Key Points:

• US Economic Momentum and Fed Rate Expectations: Economic strength in the US has led to another hawkish repricing of the Fed’s cutting cycle, with US rates expected to remain higher than those of G10 peers.

• Policy Tailwinds: Trump’s trade and fiscal plans are likely to support continued USD strength, creating a bullish backdrop for the dollar as these policies unfold.

• Global Factors: Potential Chinese economic boosts could counterbalance USD gains, but recent announcements have been underwhelming, limiting any offsetting impact.

Conclusion:

Barclays anticipates that robust US economic fundamentals and supportive fiscal policies will sustain USD strength into 2025, with limited resistance from global factors like Chinese stimulus. The dollar’s resilience appears set to continue as market sentiment aligns with favorable US conditions.

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