(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, Dec 30 (Reuters) - Thin end-of-year volumes
exacerbated broad weakness in the U.S. dollar on Monday, which
dipped for three straight sessions and on Friday suffered its
biggest one-day fall since March.
The dollar index .DXY , which measures the currency against
a basket of six rivals, weakened 0.22% to 96.708 in North
American trade. With Friday's loss, the index's gains for the
year have shrunk to around 0.6%, compared to growth of about
4.4% in 2018.
"We've had a downdraft in the dollar for the last three-four
sessions. It seemed to have accelerated beginning Friday and
into today," said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets.
"I don't think there's any fundamental story behind it.
Maybe the market stocked up a little bit on long dollar
(positions) before the turn, and now there doesn't seem to be a
need for the position. And so it's bleeding out of a very thin
market."
Some analysts argued the move was a continuation of a trend
of weaker demand for dollars on increased optimism about
U.S.-China trade relations and the global growth outlook.
Improved sentiment, which discourages investors from buying
dollars as a safe-haven asset, drove the euro EUR= to a
4-1/2-month high of $1.121 on Monday. It was last up 0.22% at
$1.120.
Signs that the euro zone economy has turned a corner have
lifted the EU single currency in recent weeks.
"The main drivers of the weaker dollar have likely been risk
appetite holding up in the wake of U.S. comments pertaining to a
Phase 1 trade deal recently, as well as the U.S. Federal
Reserve's continued repo operations, which have recently been
undersubscribed," MUFG analysts said.
Chinese Vice Premier Liu He will visit Washington this week
to sign the Phase 1 trade deal with the United States, the South
China Morning Post reported on Monday. China's yuan strengthened to touch 6.9742 CNH= in the
offshore market, its highest since Dec. 13.
Sterling GBP= was last trading 0.34% stronger against the
dollar at $1.312.
Against the euro, the pound recovered earlier losses and was
last up 0.08% at 85.36 pence. Concerns that Britain is headed
for a disruptive "hard Brexit" at the end of 2020 had been
hurting the pound since mid-December.