* Dollar ends 2019 at 6-month low, losing ground vs rivals
* Euro at 4-1/2 month highs, Aussie, Kiwi at 5-month highs
* Growth, trade optimism marks turnaround for many
currencies
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds details, latest prices)
By Olga Cotaga
LONDON, Dec 31 (Reuters) - The euro, the pound and a clutch
of trade-sensitive currencies rallied as the dollar slid to a
six-month low on Tuesday, with investors confident that global
growth prospects are improving and U.S.-China trade relations
significantly better.
After staying strong for much of 2019 thanks to the relative
outperformance of the U.S. economy and investors' preference for
a safe-haven currency amid the trade dispute between Washington
and Beijing, the dollar's gains for the year have shrivelled in
December.
The buoyant end-of-year sentiment enocouraged investors to
buy up currencies linked to trade and global growth, sending
many such as the Australian dollar, Chinese yuan and
Scandinavian crowns to multi-month or multi-week highs against
the greenback.
The dollar index was last down 0.3% at 96.435 .DXY , its
weakest since July 1.
In thin volumes on the last day of the decade, currencies
were also more volatile than many had expected.
Analysts did not attribute the moves to any specific new
developments.
"I can't see much reason for the movement in the FX market
except end-year position squaring, or just being careful and
cutting positions ahead of the New Year's holiday and the start
of 2020. As a result I wouldn't draw any big conclusions from
it," said Marshal Gittler, currency analyst at ACLS Global.
Chinese Vice Premier Liu He will visit Washington this week
to sign a Phase 1 trade deal with the United States, the South
China Morning Post reported on Monday. White House trade adviser Peter Navarro said on Monday the
trade deal would likely be signed in the next week, but that
confirmation would come from President Donald Trump or the U.S.
trade representative. Investors' appetite for risk helped drive the euro EUR=EBS
up 0.3% to $1.1230, a new 4-1/2-month high.
Signs that the euro zone economy may be stabilising have
lifted the common currency in recent weeks as investors unwound
short positions, though the currency has shed around 2% of its
value against the dollar in 2019. Latest CFTC data shows that hedge funds held $9.16 billion
of euro shorts, far less than the $14.84 billion seen in May.
EURNETUSD=
The U.S. dollar was weak across the board, cutting 2019
gains for the index that tracks the greenback against a basket
of currencies to 0.3% .DXY .
MUFG analysts saw a "bearish technical development for the
U.S. dollar that signals an increasing risk of further weakness
ahead".
"Weakness in the U.S. dollar towards the end of this year
has coincided with the renewed expansion of the Fed's balance
and the paring back of pessimism over the outlook for global
growth," they said.
Versus the Japanese yen, the dollar fell to a near
three-week low of 108.50 yen JPY=EBS and was last down 0.4%.
"STAND OUT PERFORMER"
Against the Chinese yuan, it shed 0.4% to 6.9586 in the
offshore market CNH=EBS , a 2-1/2-week low, as strong Chinese
economic data helped boost the Chinese currency. The Australian dollar climbed 0.3% to a new five-month high
of $0.7014 versus the U.S. dollar AUD=D3 .
The New Zealand dollar firmed another 0.2% to a 5-month high
NZD=D3 of $0.6742. MUFG analysts noted that the currency
"remains the stand out performer of the last quarter, surging
nearly 8% over the past three months, largely on the back of
more positive sentiment about global trade".
For 2019, however, the Kiwi is up just 0.4%.
Scandinavian currencies also strengthened against the
greenback following all-time lows seen this year on the back of
global growth fears sparked by the U.S.-Chinese trade disputes.
Sterling hit new two-week highs against the dollar, although
the possibility of a 'no-deal' Brexit at the end of 2020 means
the currency is still not close to where it was on Dec. 12, the
day Prime Minister Boris Johnson won the British election.
The pound galloped 0.8% to as high as at $1.3212 GBP=D3
and was 0.5% stronger against the euro at 85 pence EURGBP=D3 .
Sterling has gained around 3.5% against the dollar in 2019
and 5.4% versus the euro as fears of an imminent disorderly exit
from the European Union eased and then lifted with the passing
of Johnson's Brexit withdrawal agreement in parliament.