US Dollar index gains over 9% in 2015

Frankfurt (Jan 1)  The dollar ended 2015 with a more than 9 percent annual gain against a basket of currencies on Thursday, despite falling in December, with portfolio rebalancing from asset managers leading the currency higher in thin trading.

Riding a rally dating to May 2014, the greenback has appreciated by a quarter in value against a basket of currencies and by 22 percent against the euro. For the year, the greenback rose over 10 percent against the euro for its second straight yearly gain.

On Thursday, the euro hit a more than one-week low against the dollar of $1.08530, with analysts attributing the move to purchases of dollar-denominated assets from money managers moving to meet minimum exposure requirements.

"Portfolio rebalancing absolutely has something to do with the dollar's strength," said Sireen Harajli, currency strategist at Mizuho Bank in New York, referring to Thursday's gains.

The dollar index, which measures the greenback against a basket of six major rivals, hit a more than one-week high of 98.750. For the month, it fell 1.5 percent, its first decline in four months.

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 boosted the safe-haven Japanese currency. For the year, the dollar eked out a 0.4 percent gain to mark its fourth straight yearly rise against the yen.

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 the Bank of Japan, would continue to bolster the greenback.

The Fed increased 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 was last up 1.5 percent against the Swiss franc at 1.00150 franc after hitting a more than three-week high of 1.00240 franc.

The dollar rose 0.7 percent against the franc for the year to mark its second straight yearly gain.

Source: CNBC