December 27, 2017 / 3:17 PM / a year ago

FOREX-Dollar index hits 3-1/2 week low, commodity-linked currencies gain

    * Euro hits 3-1/2 week high vs dollar
    * Commodities rally supports Canadian, Australian dollars
    * Bitcoin struggles to rise further after last week's

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Dec 27 (Reuters) - The U.S. dollar fell to a 3-1/2
week low against a basket of currencies on Wednesday as traders
bet more major central banks would begin reducing monetary
stimulus in 2018 due to faster global economic growth.
    A rally in commodity prices, led by oil and copper,
propelled the Canadian and Australian dollars to their highest
levels in recent weeks.
    "The dollar has taken quite a beating against the majors in
2017," said Minh Trang, senior foreign currency trader at
Silicon Valley Bank in Santa Clara, California.
    In holiday-thinned trading, an index that tracks the
greenback against six currencies was down 0.3 percent at 93.003
 after slipping to its lowest since Dec. 1 earlier
    The dollar index has fallen 9.0 percent this year, putting
it on track for its steepest annual decline since 2003 when it
posted a 14.7 percent drop. 
    Conversely, the euro would post its best year against the
greenback since 2003. The single currency reached a 3-1/2
week high on Wednesday at $1.1904, Reuters data showed.
    The dollar weakened versus the yen for a second straight
year. It held steady on the day at 113.32 yen. 
    "There are very few events to drive anything today," said
Christin Tuxen, an FX strategist at Danske Bank in Copenhagen,
adding that last week's passage of the biggest U.S. tax overhaul
in 30 years has not helped the dollar. "For most people it's not
going to be this dollar-supportive event."     
    Traders have shifted their focus to central banks other than
the U.S. Federal Reserve and whether they would reduce bond
purchases or start raising interest rates next year, said Peter
Chia, FX strategist for United Overseas Bank in Singapore.
    Against this backdrop, Japanese policymakers may at least
start dropping more hints about an eventual tightening of the
Bank of Japan's monetary policy, Chia said, adding that the
dollar might slip to 108 yen by the end of March.
    Meanwhile, oil prices surged to 2-1/2 year highs on Tuesday
due to news of an explosion on a Libyan crude pipeline and
voluntary OPEC-led supply cuts. Copper prices on Wednesday
rocketed to 3-1/2 year peak.
    Those developments bolstered demand for the currencies of
commodity exporting countries, with the Canadian dollar touching
C$1.2627, its strongest level in three weeks.
    The Australian dollar rose 0.6 percent to $0.7776,
its highest level in two months.
    Among cryptocurrencies, bitcoin struggled to rebound further
following its worst week since 2013. It was down 3 percent at
$15,355.00 on the Luxembourg-based Bitstamp exchange.
    Currency bid prices at 9:50AM (1450 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1902        $1.1858     +0.37%         +0.00%      +1.1905     +1.1856
 Dollar/Yen       JPY=        113.3100       113.2200    +0.08%         +0.00%      +113.3700   +113.1500
 Euro/Yen         EURJPY=     134.88         134.27      +0.45%         +0.00%      +134.8800   +134.2100
 Dollar/Swiss     CHF=        0.9882         0.9889      -0.07%         +0.00%      +0.9904     +0.9884
 Sterling/Dollar  GBP=        1.3416         1.3372      +0.33%         +0.00%      +1.3429     +1.3369
 Dollar/Canadian  CAD=        1.2639         1.2688      -0.39%         +0.00%      +1.2695     +1.2627
 Australian/Doll  AUD=        0.7764         0.7727      +0.48%         +0.00%      +0.7775     +0.7724
 Euro/Swiss       EURCHF=     1.1765         1.1731      +0.29%         +0.00%      +1.1776     +1.1731
 Euro/Sterling    EURGBP=     0.8871         0.8863      +0.09%         +0.00%      +0.8882     +0.8855
 NZ Dollar/Dolar  NZD=        0.7061         0.7037      +0.34%         +0.00%      +0.7076     +0.7030
 Dollar/Norway    NOK=        8.2955         8.3089      -0.16%         +0.00%      +8.3243     +8.2808
 Euro/Norway      EURNOK=     9.8749         9.8548      +0.20%         +0.00%      +9.8859     +9.8520
 Dollar/Sweden    SEK=        8.2834         8.3469      -0.36%         +0.00%      +8.3545     +8.2870
 Euro/Sweden      EURSEK=     9.8613         9.8972      -0.36%         +0.00%      +9.9205     +9.8646
All spots FX= 
Tokyo spots AFX= 
Europe spots EFX= 
Volatilities FXVOL= 
Tokyo Forex market info from BOJ TKYFX World central bank news
Economic Forecasts... ECON   Official rates...INT/RATE
Forex Diary.......MI/DIARY   Top events........M/DIARY
Diaries...........DIARY Diaries Index........IND/DIARY
Press Digests.....PRESS Polls on G7 economies..SURVEY/
European markets......MARKETS/))


 (Additional reporting by Tommy Wilkes in London; Masayuki
Kitano in Singapore; Editing by Andrew Roche and Andrew Hay)
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