Shin Kadota, senior strategist at Barclays in Tokyo, said rebalancing of positions by market participants signalled broad selling of the dollar, particularly the yen, towards the year's end. "Seasonal trends in the currency market have shown that the dollar tends to weaken after Christmas through the first few days of the following year before eventually being bought back again," he said.
The dollar index will likely end the year down more than 9 percent, its worst showing since 2003, and a Reuters poll showed it is expected to lose a bit more ground against other major currencies next year. The dollar sagged in 2017 although the US economy expanded, the Federal Reserve tightened monetary policy and the United States enacted a major overhaul of its tax code.
Tensions stemming from the Korean Peninsula, the Russian scandal dogging US President Donald Trump's election campaign, and low US inflation were some of the factors that shackled the dollar in 2017 and expected to continue weighing on the currency in 2018. The dollar was 0.1 pct lower at 112.735 yen. It had slipped to a nine-day low of 112.660 overnight, having gone as high as 113.750 on December 12. It was headed to lose 3.5 percent against its Japanese peer in 2017.
The euro was steady at $1.1947 and in close reach of a one-month high of $1.1959 scaled the previous day. It has gained 0.3 percent in December. The euro has risen 13.5 percent this year, its strongest annual gain since 2003. It was lifted by factors including relief over the French elections and expectations for the ECB to normalise monetary policy while taking in stride political developments in Germany and Spain.
The Australian dollar was effectively flat at $0.7795 having surged to a two-month peak of $0.7810 the previous day. The Aussie was headed for a 3 percent monthly gain, lifted by a rise in the prices of commodities like iron ore and copper. The Canadian dollar extended its overnight rally to touch C$1.2555 per dollar, its strongest since October 20.
The loonie was on track to gain 2.5 percent in December, boosted by a surge in crude oil prices. The New Zealand dollar edged up to $0.7099, its highest since October 19. The kiwi retreated to a 17-month trough of $0.6781 in November, buffeted by a change of government, but has bounced back nearly 5 percent from that low. Bitcoin was last up 3.2 percent at $14,908.44 on the Bitstamp exchange having sunk 6 percent on Thursday. It was off the record highs near $20,000 touched 12 days ago but still headed for a gain of roughly 1,400 percent in 2017.
Copyright Reuters, 2017