2024: Octa Broker looks at the year’s biggest market stories

2024 has been a year of
contradictory events, significant economic changes, and major political shifts.
On a positive note, it was the year when global central banks finally managed
to tackle inflation, partly induced by the negative and far-reaching effects of
the COVID pandemic and partly by the more recent geopolitical events.

After holding borrowing costs near
record highs for most of 2023, almost all major central banks started to cut
rates in 2024. However, the pace of interest rate reductions varied, leading to
a divergence in monetary policy expectations between different economies,
which, in turn, resulted in notable exchange rate fluctuations among major
currencies.

On a negative note, however, 2024
has been a year of lingering political uncertainty and geopolitical
instability. Although investors learned to coexist with the simmering conflicts
in Eastern Europe and the Middle East, a sense of underlying unease persisted.
Adding to this sense of anxiety is the changing political landscape.

Indeed, numerous elections took
place in tens of countries around the world in 2024. Investors were
particularly concerned about the parliamentary elections in France, the general
elections in the United Kingdom, and the presidential and congressional elections
in the United States. The market still feels the effect of these elections,
with traders and investors anticipating major changes in economic policies and
trying to front-run their impact on global assets.

The U.S. Dollar (USD) has been the
best-performing currency in 2024 among the 20 global currencies that Octa
Broker tracks. From 29 December 2023 to 13 December 2024, the U.S. dollar index
(DXY), which measures the value of the greenback against the basket of six
foreign currencies (the euro, Japanese yen, British pound, Canadian dollar,
Swedish krona, and Swiss franc) rose by almost 6%. However, the index has
undergone substantial fluctuations over the course of the year.

Kar Yong Ang, a financial market
analyst at Octa Broker, explains: ‘The
dollar index has been on a rollercoaster ride in 2024, soaring to new
multi-month heights and plummeting to fresh multi-month lows. Although the
greenback looks like the best-performing currency in 2024 so far, the lion’s
share of its appreciation occurred during the latter part of the year and has
been mostly driven by expectations for a major shift in U.S. trade policy.’

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20 currencies performance in 2024

Indeed, the market is concerned that
Donald Trump’s proposed immigration and trade policies could have inflationary
consequences, prompting the Federal Reserve (Fed) to adopt a less dovish
monetary policy. As a result, the divergence in investors’ monetary policy
expectations between the Fed and other major central banks has widened, leading
to higher capital inflows into the U.S. dollar. Furthermore, the U.S. economy
has been outperforming other advanced economies in 2024 and is expected to
continue to do better than the rest in 2025 as well. According to the
International Monetary Fund (IMF), real gross domestic product (GDP) growth of
advanced economies in 2024 will average just 1.8%, whereas the U.S. GDP is
projected to expand by 2.8%.

Because the dollar advanced higher,
most major currencies are poised to conclude the year with negative
performance. The only exception is the British pound, which is anticipated to
finish the year virtually unchanged compared to 2023. ‘The relative strength of the U.S. dollar is only one of many reasons
why most other major currencies underperformed in 2024. Other factors, however,
are specific to individual countries and a major bearish factor this year
specifically has been the lack of political certainty, which currencies do not
like,’ says Kar Yong Ang, a financial market analyst at Octa Broker.
Indeed, EURUSD, the most liquid and widely traded foreign exchange (Forex) pair
in the world, has been weakened by political uncertainty in the eurozone’s
largest economies—France and Germany—where political stalemate led to
high-profile resignations and early elections. Likewise, when the U.K.

Prime Minister Rishi Sunak called a
snap parliamentary election, GBPUSD experienced one of the biggest one-day
declines of 2024. Moreover, the sluggish
growth in the eurozone and the U.K. has prompted investors to anticipate
additional rate cuts from both the European Central Bank (ECB) and the Bank of
England (BoE). In contrast, the Fed is expected to slow down its easing cycle,
further widening the interest rate differential between the U.S. dollar on the
one hand and the euro and sterling on the other.

Despite its safe-haven status, the
Japanese yen (JPY) was the most volatile currency among the majors. Three-month
implied options volatility for the yen, a measure of trader hedging demand,
averaged around 9.73% in 2024, whereas the total average across seven major
currencies was 7.46%. ‘USDJPY traders
have had a wild ride in 2024. It has been a total rollercoaster, to be honest.
I think fortunes were made and lost here very quickly. This outgoing year has
been truly historical for the JPY,’ says Kar Yong Ang, a financial market
analyst at Octa Broker. Indeed, during the year’s first half, the bullish
dollar momentum has propelled the pair to a multi-decade high. Then, as rumours
of potential intervention by Japanese authorities to bolster the yen began to
spread, the USDJPY pair started to decline.

A massive sell-off accelerated in
late July after the Bank of Japan (BoJ) raised interest rates to 15-year highs
and announced details on how it will reduce its huge bond buying. Kar Yong Ang
explains: ‘At that time, it looked like
BoJ was taking a surprisingly hawkish stance. Its decision really shook the
markets and caused investors to reassess popular JPY carry-trades.’

The commodities’ performance varied
greatly, and each deserves a separate story to tell, but coffee, lithium, gold,
and silver have certainly been the biggest stories in 2024.

Just recently, the prompt-month
futures contract of arabica coffee traded on Intercontinental Exchange (ICE)
hit an all-time high. It is up some 70% year-over-year (y-o-y), which makes it
the best-performing commodity in 2024 among 20 other commodities that Octa
Broker tracks. ‘Like many other soft
commodities, both arabica and robusta coffee futures are almost entirely driven
by the whims of the weather. This year, Brazil, [the world’s largest coffee
producer], experienced its worst drought
in 70 years, whereas Vietnam, [another key producer] was faced with both drought and heavy rainfall,’ says Kar Yong
Ang, a financial market analyst at Octa Broker.

Indeed, according to official
customs data, Vietnam’s coffee exports in the first half of this year were
893,820 metric tons, down 11.4% from a year earlier[1].
Traders are very much concerned about the 2025 global crop outlook, and prices
have reflected these worries.

In contrast, lithium has been the
worst-performing commodity in 2024 as the sale of electric vehicles (EV)
started to level off while capital investments from previous years boosted
production capacity and led to oversupply. According to Refinitiv, the price of
Lithium Hydroxide futures contracts traded on the Commodity Exchange (COMEX)
was down 42.3% y-o-y as of December 13, 2024.

As for precious metals, 2024 has
been a record-setting year, especially for gold. The price for the yellow metal
has been setting a new all-time high essentially every month in 2024. Kar Yong
Ang, a financial market analyst at Octa Broker, outlines three main factors
that have contributed to such a meteoric rise in gold prices.

‘It all
boils down to three sources of demand: safe-haven demand due to intensifying
geopolitical tensions, investor demand due to less tight monetary policy
globally, and structural demand from global central banks as part of
de-dollarization and diversification efforts.’ As many times before, gold
has once again proved its underlying value as a protective asset during times
of uncertainty and may continue to shine in the months ahead. Although the
price of silver did not set any new records, its y-o-y performance was even
more impressive than that of gold: +28.6% (as of December 13).

‘Perhaps
surprisingly, but despite growing geopolitical tensions, crude oil prices went
down annually. This is mostly because non-OPEC members—notably, the U.S.—have
managed to increase production but also because investors were worrying about
the health of the Chinese economy, the main importer of crude oil,’ says Kar
Yong Ang, a financial market analyst at Octa Broker.

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20 commodities performance in 2024

2024 also witnessed significant
developments in the cryptocurrency market, particularly for Bitcoin. On March
8, its price set a new all-time high of $70,000. On 5 December, it finally
managed to achieve another key milestone of $100,000 per coin. However, Bitcoin
was not the best-performing digital coin of 2024. The price of Doge has
increased four-fold. Most of the gains in the crypto sphere were in response to
Donald Trump’s victory in the U.S. presidential elections. Such a favourable
market reaction to Trump’s victory stems from investors’ belief that his
Administration, coupled with a friendly Congress, will effectively deregulate
the crypto industry, facilitate its expansion, and implement a coherent
regulatory framework that will serve investors and consumers for years to come.

‘It
should be said, argues Kar Yong Ang, that
this belief is not without foundation. Trump has managed to lure many crypto
fans to his side with his bold moves, clear views, and a strong focus on
deregulation.’

Top
5 crypto coins performance in 2024

Overall, 2024 has been a year of
uneven economic growth and significant political shifts. While central banks
successfully addressed inflationary pressures globally, diverging monetary
policies led to notable currency fluctuations. At the same time, geopolitical
tensions have been on the rise, while political uncertainty persisted.

The U.S. dollar emerged as the
strongest currency, driven by a strong U.S. economy, a tightening monetary
policy stance, and expectations of potential policy shifts. Other major
currencies, such as the euro and the British pound, faced headwinds from economic
sluggishness and political instability.

In the commodity markets, 2024 was a
year of extremes. While arabica coffee prices soared to record highs due to
supply shortages, lithium prices plummeted as oversupply concerns mounted.
Precious metals, particularly gold, experienced a remarkable surge, driven by
safe-haven demand, easing monetary conditions, and central bank buying.

Meanwhile, the main crypto coins
broke new records and seem to be poised for major transformations in 2025.

About Octa

Octa is an
international broker that has been providing online trading services worldwide
since 2011. It offers commission-free access to financial markets and a variety
of services used by clients from 180 countries who have opened more than 52
million trading accounts. To help its clients reach their investment goals,
Octa offers free educational webinars, articles, and analytical tools.

The
company is involved in a comprehensive network of charitable and humanitarian
initiatives, including the improvement of educational infrastructure and
short-notice relief projects supporting local communities.

Since
its foundation, Octa has won more than 90 awards, including the ‘Most Reliable
Broker Global 2024’ award from Global Forex Awards and the ‘Best Mobile Trading
Platform 2024’ award from Global Brand Magazine.

This article was written by FL Contributors at www.forexlive.com.