The euro and the British pound strengthened slightly, reaching new three-month highs.
The global economy is preparing for a "year of consequences," as tariffs imposed by Donald Trump begin to directly hinder global GDP and overload European ports. This is reported by Bloomberg.
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The main message from analysts: 2025 was the year of tariff announcements, while 2026 will be the time for economic reckoning. Already, imports to the US have fallen by 8%, while goods flows are being redirected to India, Latin America, and Africa. According to OECD forecasts, due to trade wars, global production could decline by 0.3%, while inflation may rise. Companies are forced to massively rethink supply chains to circumvent the 10-40% tariffs imposed by Washington.
USMCA Revision: A Rift Among Allies
One of the main events of the year will be the mandatory revision of the trade agreement between the US, Canada, and Mexico. The Trump administration has already indicated that it will not be limited to procedural matters.
Practically all stakeholders have called for improvements to the agreement, notes US Trade Representative Jamieson Greer.
However, any concessions by one country will mean losses for another, which threatens to disrupt stable industrial ties in North America.
The logistics sector is expecting a "second blow" due to a possible mass return of ships to the Suez Canal. If the security situation allows for avoiding the longer route around Africa, the market will instantly face an oversupply of capacity. Experts warn: a sudden return of the fleet to the Red Sea will cause a collapse and "widespread port congestion problems in Europe," similar to the bottlenecks during the pandemic.
Convincing data on US GDP did not affect the rate forecast, and investors are pricing in about two more rate cuts by the Fed in 2026.
"We expect the Federal Open Market Committee (FOMC) to compromise on two more cuts of 25 basis points to 3-3.25%, but we see risks to the downside," said David Mericle, chief economist at Goldman Sachs US, citing slowing inflation as the reason for this forecast.
The euro and the British pound strengthened slightly, reaching new three-month highs, although they remained generally stable during the day at $1.180 and $1.3522, respectively.
Against a basket of currencies, the dollar index fell to a 2.5-month low of 97.767. It is expected to lose 9.8% since the beginning of the year, marking the steepest annual decline since 2017. Further weakening in the last week of the year will lead to the largest drop since 2003.
The dollar has had a tumultuous year, marred by chaotic tariffs from President Donald Trump, which triggered a crisis of confidence in American assets earlier this year, as well as his influence on the Fed, raising concerns about its independence.
In contrast, the euro has risen by just over 14% since the beginning of the year, marking its best performance since 2003, the publication notes.
The European Central Bank maintained interest rates at their previous level last week and revised some growth and inflation forecasts upward, likely closing the door on further monetary easing in the near future.
Traders reacted by pricing in a small likelihood of policy tightening next year, reflecting expectations for Australia and New Zealand, where such moves are seen as rate hikes.
This, in turn, supported two currencies: the Australian dollar, which has appreciated by 8.4% since the beginning of the year, reaching a three-month high of $0.6710 on Wednesday, and the New Zealand dollar similarly reached a 2.5-month high of $0.58475.
The British pound has risen by more than 8% since the beginning of the year. Investors are betting that the Bank of England will cut interest rates at least once in the first half of 2026 and assess the probability of a second cut at about 50% by the end of the year.
However, most currencies have significantly lost ground against precious metals, such as gold, which reached a new record high on Wednesday.
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