The dollar weakened against a basket of currencies in thin trading on Monday as the euro strengthened in the wake of an inconclusive election result that may increase unease over Spain's financial stability. With the historic US rate lift-off in the rear view mirror, traders focused their attention on slumping commodities prices on the global economy and central bank policies with oil hitting fresh 11-year lows.
The dollar index has retreated from two-week highs following the US Federal Reserve's first rate increase in nearly a decade last Wednesday. "The US rate hike went off extremely well. It should be dollar positive over time," said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York.
Still the greenback lost ground broadly at a start of an abbreviated trading week when US and most European markets will close on Friday for Christmas. The euro rose despite no parties in Spain won a clear mandate to govern this weekend, raising concerns about the economic reforms in the euro zone's fourth biggest economy. The single currency was up 0.4 percent at $1.0911 and 132.24 yen.
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