The US dollar index fell 0.5% on Thursday, as investors became nervous at the end of the year. The initial optimism for the reopening of Asian powers gradually dissipated, and the market digested data on US claims for unemployment benefits. Data showed that last week, the number of Americans continuing to apply for unemployment benefits reached a new high since early January.

At the beginning of the Asian market on Friday (December 30th), the US dollar fluctuated in a narrow range and is currently trading around 104.01. The US dollar index fell 0.5% on Thursday, as investors became nervous at the end of the year. The initial optimism for the reopening of Asian powers gradually dissipated, and the market digested data on US claims for unemployment benefits. Data showed that last week, the number of Americans continuing to apply for unemployment benefits reached a new high since early January.

The market is weighing the impact of the rapid relaxation of strict COVID-19 control by Asian powers, which has led to the surge of infected people.

I believe China will be one of the key factors for the global economy in 2023, "said Chris Gaffney, President of Global Markets at TIAA Bank

After China lifted the centralized isolation regulations for inbound passengers from January 8, the United States, Japan, India and other countries said that they would require passengers from China to undergo the COVID-19 test.

Gaffney said, "If they can rebound from the significant slowdown we see, it will help global overall growth, but on the other hand, it may also lead to an increase in energy demand, and more demand means higher prices

The USD/JPY fell from a more than one week high on Thursday and closed 1.1% lower at 133.00 yen. It hit a one week high of 134.50 yen on Wednesday.

The US dollar briefly hit 0.9210 Swiss francs on Thursday, its lowest level since March 31, and fell 0.6% in late trading to close at 0.9228 Swiss francs.

The US dollar index closed down 0.52% on Thursday at 10398, after climbing 0.31% on Wednesday.

Steve Englander, head of G10 foreign exchange research at Standard Chartered Bank, stated that the decline may be in response to the newly released US unemployment benefits data on Thursday.

The US Department of Labor found that in the week ending December 17th, the number of people applying for unemployment benefits increased to 1.71 million, a barometer of recruitment that has been continuously rising since early October.

Englander said, "From a historical perspective, when you see a growth rate like the number of people continuing to apply for unemployment benefits, it is an early signal of economic recession

But analysts warn that as the market enters a new year and trading volume is low, do not interpret price trends too much.

Englander said, "It's the end of the year and there are liquidity issues and so on, so compared to normal liquidity, the market may have a greater reaction to the released data

Craig Erlam, a market analyst at currency platform Oanda, said investors may be eager for the fresh information brought by 2023.

He said, "We seem to be largely in a state of drift, waiting for traders to return after the year-end, and we can get the latest ideas and data from decision-makers

The pound rose 0.32% against the US dollar on Thursday to $1.2053; The Australian dollar rose 0.53% to close at $0.6774 on Thursday, while the New Zealand dollar rose 0.54% to close at $0.6343 on Thursday.

Citigroup: It is expected that the average exchange rate range of GBP/USD will be between 1.23 and 1.28, until the long-term situation improves

The pound has rebounded from the sharp sell-off caused by the tax cut proposal of Prime Minister Truss before September 2022 without financial support. Citigroup economists expect the pound to fluctuate between 1.23 and 1.28 against the US dollar in 2023. If the pound is to continue to appreciate, the UK needs to come up with a sustainable long-term growth strategy. The outlook for the UK in 2023 is bleak, with a potential recession, the most severe foreign trade deficit among developed countries, and trade with the EU being hindered by Brexit. The Bank of England also faces a daunting task of reducing high inflation without exacerbating the UK economic recession and falling housing prices. In this context, we believe that the pound may further weaken against the US dollar. We expect the average exchange rate range of the pound against the US dollar to be between 1.23 and 1.28, until the long-term situation improves.

Deutsche Bank: High inflation will continue beyond 2023

Inflation has once again become a major issue. Economists at Deutsche Bank believe that the decline in inflation in the eurozone will be slower than in the United States. In 2023, inflation will still be much higher than the targets set by Europe and the Federal Reserve. Although overall inflation in the United States seems to have peaked, inflation in Germany and the eurozone may not peak until February or March 2023. Looking ahead to the full year of 2023, we expect inflation to be 7.0% in Germany, 6.0% in the eurozone, and 4.1% in the United States. It is expected that high inflation will continue beyond 2023. In the foreseeable future, inflation is unlikely to return to relatively low levels before the pandemic.

JPMorgan Chase: US stocks expected to rise next year

Economists at JPMorgan Chase believe that the US stock market has already solved the problem before the macroeconomic problems of 2023, and now seems increasingly attractive. Although we do not believe that the stock market has bottomed out, we do believe that considering the decline in 2022, the risk to return ratio of the stock market in 2023 has improved. Due to having digested a considerable amount of bad news, we believe that the possibility of further decline is more limited than at the beginning of 2022. Importantly, the possibility of a rise in US stocks by the end of next year has increased enough to become a basic scenario.

Citigroup economists expect the strong rise of the US dollar to come to an end

They predict that the rise of the US dollar since 2021 will stop and reverse at some point in 2023. This is partly because as economic growth slows down, the Federal Reserve may be more proactive than other G10 central banks in stopping interest rate hikes

Overseas Chinese Bank: cautiously viewing the outlook for sterling

① Christopher Wong, an analyst at OCBC Bank, said, "The continued decline of the pound is consistent with our caution towards a short-term decline

② He added, "The bearish trend on the daily chart is intact, while the relative strength index (RSI) has declined. Due to concerns about stagflation, we still hold a slightly cautious attitude towards the outlook for the pound.