US Dollar tumbles to 3-month lows, headed for a yearly loss of over 9%

The US Dollar Index, which measures the greenback's performance against a basket of currencies, tumbled to its lowest level in more than three months.

On the last trading day of the year, the USD continued to lose ground against its major counterpart and was further being weighed down by a mildly softer tone around the US Treasury bond yields.

Against the backdrop of fading optimism over the passage of a long-awaited tax reform bill, year-end portfolio rebalancing is now pointing towards broad-based USD selling. 

The ongoing weakness could partly be attributed to weaker incoming US economic data, with the latest disappointment coming from Thursday's goods trade deficit and weekly jobless claims. 

Moreover, pre-holiday thin trading conditions seemed to have further aggravated the selling pressure and dragged the buck to its lowest level since September. Currently hovering around the 92.00 handle, the index remains on track for yearly losses in excess of 9.0%, marking its first yearly decline since 2012.

Meanwhile, expectations for gradual Fed monetary policy tightening through 2018 also failed to provide any immediate respite and with just a few hours of trading left for the year, the USD is set to suffer its worst year since 2003.