December 29, 2017 / 5:45 PM / 8 months ago

CORRECTED-FOREX-Dollar heads for worst year since 2003, bitcoin soars

 (Corrects paragraph 9 to read 30 years instead of 20 years)
    * Dollar index touches three-plus month lows
    * Euro on track for best year since 2003 vs greenback
    * Seasonal factors seen weighing on dollar at year's end
    * Financial markets to close on Monday on New Year' Day

    By Richard Leong
    NEW YORK, Dec 29 (Reuters) - The dollar fell to its lowest
in over three months against a basket of major currencies on
Friday, on track for its biggest annual drop since 2003, on
doubts over durability of a pickup in U.S. economic growth in
wake of last week's tax overhaul.
    One of the most dramatic market developments in 2017 was the
breath-taking rise of bitcoin and other
cryptocurrencies. While they have pulled back at year-end, many
of these digital currencies have surged in value this year. 
    The greenback may lag further against its peers in 2018 as
investors expected other major central banks to reduce their
stimulus while the Federal Reserve has signaled it would raise
interest rates further, analysts said.
    "The dollar will face more headwinds in 2018," said Chris
Gaffney, president of Everbank in St. Louis, Missouri. "The Fed
won't be going at it alone in terms of taking off more gas from
the stimulus pedal."
    Bets the European Central Bank might consider raising
interest rates by the end of 2018 due to evidence of higher
inflation and business activity in the euro have lifted the
euro, which was poised for its best yearly performance versus
the greenback in 14 years.
    The euro hit a three-month peak at $1.2013, bringing
its annual gain to 14.1 percent. It was last up 0.68 percent at
$1.2022.
    Euro's rally was a drag on the greenback in 2017. The index
that tracks the dollar versus the euro and five other major
currencies fell as low as 92.169, which the lowest since
Sept. 22. It was on track for its steepest annual decline since
2003.
    The dollar also weakened against the yen, sterling
, Canadian dollar, Swedish krona and
Swiss franc, which are the other index components this
year.
    The dollar index at a 14-year peak at the start of 2017 on
hopes for U.S. President Donald Trump's pro-growth economic
agenda. Barring the most dramatic rewrite of the U.S. tax code
in 30 years enacted last week, Trump and Republican lawmakers
have struggled to pass legislation.
    Furthermore, many institutional investors close their books
at the year-end, a deadline for taxation and performance
reporting, a time seen leading to dollar selling pressure,
analysts said.
    Outside of traditional currencies, bitcoin and other
cryptocurrencies rebounded after two days of losses tied partly
to more regulators toughening rules on digital currencies in a
bid to curb excessive speculation.
    Bitcoin was last up 1.13 percent at $14,599.99 on the
Bitstamp exchange. 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.
    Financial markets around the world will be closed on Monday
on New Year's Day.    
========================================================
    Currency bid prices at 12:02PM (1702 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2023        $1.1941     +0.69%         +14.36%     +1.2028     +1.1937
 Dollar/Yen       JPY=        112.6600       112.8700    -0.19%         -3.60%      +112.9700   +112.4800
 Euro/Yen         EURJPY=     135.47         134.80      +0.50%         +10.01%     +135.5100   +134.5500
 Dollar/Swiss     CHF=        0.9734         0.9784      -0.51%         -4.36%      +0.9789     +0.9735
 Sterling/Dollar  GBP=        1.3528         1.3442      +0.64%         +9.66%      +1.3543     +1.3429
 Dollar/Canadian  CAD=        1.2513         1.2567      -0.43%         -6.83%      +1.2572     +1.2515
 Australian/Doll  AUD=        0.7814         0.7796      +0.23%         +8.30%      +0.7824     +0.7789
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1705         1.1687      +0.15%         +9.22%      +1.1722     +1.1672
 Euro/Sterling    EURGBP=     0.8885         0.8882      +0.03%         +4.31%      +0.8893     +0.8858
 NZ Dollar/Dolar  NZD=        0.7098         0.7087      +0.16%         +2.26%      +0.7123     +0.7085
 Dollar/Norway    NOK=        8.1775         8.2489      -0.87%         -5.32%      +8.2551     +8.1787
 Euro/Norway      EURNOK=     9.8340         9.8527      -0.19%         +8.23%      +9.8760     +9.8131
 Dollar/Sweden    SEK=        8.1629         8.2441      -0.31%         -10.37%     +8.2497     +8.1651
 Euro/Sweden      EURSEK=     9.8144         9.8450      -0.31%         +2.45%      +9.8620     +9.8139
    

    
 (Additional reporting by Jemima Kelly in London; Shinichi
Saoshiro in Tokyo; Editing by Matthew Mpoke Bigg and Andrew Hay)
  
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