Euro dips on Catalan vote; bitcoin plummets

NEW YORK (Reuters) - The euro slipped against the dollar on Friday after Catalan separatists won a regional election, prompting worries about the possible break-up of the euro zone’s fourth-largest economy.

Spain’s government had hoped that the Catalan election would strip pro-independence parties of their control of the regional parliament and end their campaign to force a split. But with 96 percent of ballots counted in a vote to elect Catalonia’s regional parliament, separatist parties are seen winning 70 seats out of 135.

“The euro dipped on the (Catalunya) headline but it is not obvious that the vote advances the issue one way or the other and the euro found good support on dips,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

The euro slid 0.1 percent to $1.1858. But Europe’s common currency was still up nearly 13 percent this year, on track for its best yearly performance in 14 years.

Analysts said trading volumes were thin ahead of the Christmas holiday, resulting in some volatility.

Friday’s most eye-catching mover was once again bitcoin, this time because of losses, after a rally that took it all the way near $20,000 on Dec. 17. It plunged nearly 30 percent at one point to below $12,000, having lost a third of its value since Sunday.

The dollar index was flat at 93.316. For the year, the index was down about 8.5 percent.

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“Over the coming months, we see scope for the U.S. dollar to stay within its overall consolidative pattern, while we expect renewed U.S. dollar weakness later next year as global monetary policy trends return as a key FX influence,” said Wells Fargo in a research note.

The U.S. bank expects other major central banks to resume the gradual shift towards less accommodative monetary policies, narrowing their divergence with the Federal Reserve, which is in the midst of raising interest rates. That should point to strength in other currencies such as the euro and sterling, at the expense of the dollar, analysts said.

One immediate threat to dollar bulls was removed on Thursday, as the U.S. Senate approved a bill to fund the federal government through Jan. 19 and avert agency shutdowns ahead of a Friday midnight deadline. The next step is for President Donald Trump to sign the bill into law.

Congress this week also approved the most significant U.S. tax code overhaul in three decades that is expected to give a short-term lift to already solid economic growth, providing support to the dollar.

The dollar was steady against the Japanese yen at 113.30.

Reporting by Gertrude Chavez-Dreyfuss; additional reporting by Jemima Kelly in London; Editing by Nick Zieminski and Richard Chang