Markets News

FOREX-Dollar firm against most majors in holiday-lulled trading

* Australian dollar near five-month high

* Sterling on pace to snap 5-day losing streak (Recasts throughout, updates rates, adds comments post-U.S. market open; new byline; previous LONDON)

NEW YORK, Dec 24 (Reuters) - The dollar edged higher against the euro in holiday-thinned trading on Tuesday, ahead of the Christmas holiday, while the British pound looked set to snap a five-day streak of losses against the U.S. currency.

Against the dollar, the euro was 0.05% lower.

“The holiday has already shut several markets, and those that are open are lightly traded,” Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, said in a note.

“The U.S. dollar is showing a firmer profile against most of the major currencies,” Chandler said.

The dollar index, which measures the greenback against six major currencies, was up 0.06% at 97.715.

The dollar, up about 1.6% for the year as measured by the dollar index, has broadly benefited during bouts of risk aversion - because it is considered a safe-haven currency - and when markets have rallied, because the U.S. economy is outperforming other parts of the world.

However, a recent cooling of trade-related tensions between the United States and China, following an interim trade agreement earlier this month, has led investors to favor trade-sensitive currencies over the greenback.

The Australian dollar, while about flat on the day against the dollar, remained close to a five-month high against the greenback.

The Aussie tends to do well when optimism grows over global trade and China’s economy.

China’s yuan was about flat on the day after Premier Li Keqiang said the government was considering more measures to lower corporate financing costs and hinted at “targeted” cuts in banks’ reserve requirement ratio. The offshore yuan last traded at 7.008.

The Canadian dollar was trading 0.08% lower against the greenback at 1.3154 to the U.S. dollar, or 75.99 U.S. cents, a day after data showed Canada’s economy unexpectedly shrank by 0.1% in October.

Sterling, which has fallen against the dollar for five straight days, as its post-election rally floundered amid growing anxiety around the possibility of a hard and chaotic Brexit in the coming months, steadied on Tuesday.

Sterling was up 0.13% at $1.295. The pound, which had surged after Boris Johnson’s Conservative Party won a majority in the UK general election on Dec. 12, has given up all those gains and some more.

“We suspect that the bulls have pared their positions amid the buy the rumor sell the fact activity since the election,” Bannockburn’s Chandler said.

Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci