NEW YORK: The dollar was set to end 2015 with a more than 9 percent annual gain against a basket of currencies on Thursday, despite a small decline in December, with portfolio rebalancing from asset managers leading the currency higher in thin trading.
Riding a rally dating back to May 2014, the greenback has appreciated by a quarter in value against a basket of currencies and by over 20 percent against the euro. For the year, the greenback is up about 10 percent against the euro.
On Thursday, the euro hit a more than one-week low against the dollar of $1.08750, with analysts attributing the move to purchases of dollar-denominated assets from money managers moving to meet minimum exposure requirements.
"It would be consistent to see a portfolio rebalancing that may imply a greater exposure to the U.S. dollar," said Mazen Issa, senior currency strategist at TD Securities in New York.
Against the yen, the dollar hit a more than two-month low of 120.005 yen. Analysts said weaker-than-expected U.S. Chicago Purchasing Managers' Index data drove demand for the safe-haven Japanese currency.
The dollar index, which measures the greenback against a basket of six major rivals, hit a more than one-week high of 98.564. Trading volumes remained thin heading into year-end.
The dollar has advanced this year on views that the Federal Reserve's start to its cycle of interest rate increases, combined with steadily loose monetary policy from the European Central Bank and Bank of Japan, would continue to bolster the greenback.
The Fed hiked rates for the first time in nearly a decade earlier this month and projections from Fed policymakers indicated that they expect four more increases next year.
Analysts said that divergence in monetary policy would remain a theme at least into the first quarter of 2016.
"The Fed could come back with a second hike in March, which is not fully priced in, and the dollar should draw fresh support from that," said Richard Franulovich, senior currency strategist at Westpac in New York.
The dollar set a more than one-year high against the Russian ruble on Thursday of 74.32 rubles after weakness in oil prices early in the session. Russia is a key oil exporter.
The dollar was last up 0.87 percent against the Swiss franc at 0.99700 franc after hitting a more than three-week high of 0.99940 franc.
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