💵📉Dollar Posts Worst Year Since 2017: Cable FX Macro

• 2025 has been a challenging year for the US Dollar, which has been one of the weakest performers among major currencies. Across a variety of measures, the dollar is posting almost double-digit declines — the DXY is down approximately 9.7% year-to-date as of December 30, 2025, on track for its worst annual performance since 2017. This reflects factors like Fed rate cuts, narrowing interest rate differentials, fiscal concerns, and global diversification away from USD assets. These themes gained traction on April, when the Trump administration started its tariff policy against major trading partners.

• A stand-out currency is the SEK, the krona is set to close the year up 21.6% vs the dollar. Not even its cousin, the NOK, is close to match these gains. The theme in the SEK is supported by an improvement in the local economy, the Riksbank monetary policy diverging vs peers, and the Swedish defense sector propped up by its recent integration to NATO. Also, desks reported that model desks have amplified the gains as the momentum chasing strategies targeted the krone.

• In factor performance, goign long high-interest-rate currencies (e.g., AUD, NZD historically) and short low-yield ones (e.g., JPY, CHF) was a poor performer as the high-yielders lagged significantly. Momentum records a consecutive year of outperformance in 2025, the strategy bucked on USD weakness while it went long SEK, CHF and EUR.

• For a detailed report on FX factor performance, please reach me at contact@cablefxm.co.uk