Odaily Planet Daily News: JPMorgan Chase predicts that the US dollar may remain strong throughout the year, supported by a strong US economy that is expected to surpass other developed countries. According to its recent report, the bank attributes the continued strength of the US dollar to the widening gap in global economic performance. The report points out that the US economy is expected to grow by 2.7% in 2024, far higher than the forecast of 1.7% for other developed economies. Strong productivity, increased corporate investment, and reduced labor shortages have driven this growth, keeping inflation above the Federal Reserve's 2% target. This may prompt the Federal Reserve to postpone interest rate cuts, thereby maintaining the upward momentum of the US dollar. JPMorgan believes that although the Federal Reserve is expected to relax monetary policy, the magnitude of interest rate cuts this year may be small due to the strong economy. The market expects the Federal Reserve to cut interest rates slightly by 44 basis points, while the European Central Bank is expected to cut interest rates by 110 basis points, and the Bank of Japan is expected to raise interest rates by 47 basis points. The report also points out that the policies proposed by the new US government are another factor supporting the US dollar. The plan to promote domestic manufacturing, increase tariffs, and relax industry regulations may stimulate business growth and maintain higher interest rates, further supporting the US dollar. However, JPMorgan warns that the long-term trend of the US dollar is facing challenges. The country's trade deficit at the end of 2024 accounted for 4.2% of GDP, reflecting a heavy dependence on imported goods. Although the US dollar is currently strengthening, this structural imbalance may ultimately weaken its position.
