(December 29, 2017) The dollar fell against a basket of major currencies on Friday as both the euro and pound made large gains to end the year on a bullish note.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.48% to 91.84.
In what was the final trading day of the year, the dollar continued to drift lower and is on track to post its worst performance since 2003.
The recent dollar weakness comes against expectations for further Federal Reserve rate hikes in 2018. Markets have priced in at least three rate hikes for 2018. Traders, however, have slashed their bearish bets on the greenback to the lowest level since mid-November.
The value of net short dollar positions was $2.18 billion in the week ended Dec. 19. That was lower than the previous week’s net short position of $7.81 billion.
The euro, meanwhile, added pressure on the dollar rising to $1.2024, up 0.69%, shrugging off renewed Eurozone political jitters as Italy announced an election slated for March 4.
GBP/USD rose 0.68% to $1.3524, while USD/CAD fell 0.33% to C$1.2528 as the latter continued to add to gains amid bullish oil prices as crude futures rose to fresh two-and-a-half-year highs.
USD/JPY fell 0.25% to Y112.62.