FOREX/BONDS-Euro cruises higher as dollar skids again

* U.S. House votes to increase stimulus cheques to $2,000
* Dollar short positions at the highest in three months
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Marc Jones
LONDON, Dec 29 (Reuters) - The dollar languished near a
2-1/2-year low on Tuesday as investors were encouraged to take
on more risk after U.S. lawmakers pushed forward with an
enhanced COVID-19 relief package.
The House of Representatives voted on Monday to more than
triple stimulus payments to Americans to $2,000 from $600,
sending the plan on to the Senate for a vote. The euro and pound also strengthened as London reopened
after its Christmas break. Traders were digesting the EU-UK
Brexit trade agreement reached late last week and relieved a
'no-deal' had been avoided.
Euro bulls pushed the single currency up to $1.2235 EUR= ,
also buoyed by talk of a EU-China trade pact. The pound was back
above $1.35 GBP= , while the dollar index =USD was down 0.3%
near the lows of April 2018.
"The dollar is very heavy," said Bart Wakabayashi, Tokyo
Branch manager of State Street Bank and Trust. "And that will
continue into next year."
Data released by the Commodity Futures Trading Commission on
Monday showed traders increased bets against the greenback in
the week ended Dec. 21 to $26.6 billion. That was the highest in
three months, Reuters' calculations found. Sterling long positions grew ahead of the trade deal, the
figures also showed, though the next set of data will reveal
whether speculators "sold the fact".
Sterling rose 0.2% to $1.3484 GBP= following a two-day
dip. It was as high as $1.3625 this month, a level unseen since
May 2018, but investors have taken some profits since the Brexit
trade deal was struck.
Nick Nelson, head of European Equity Strategy, said the
firm's FX strategists were targeting GBP/USD $1.44 by end-2021.
State Street's Wakabayashi said, however, that "Nothing has
really been agreed (between the EU and London) on financial
markets, and that's a big negative for the UK."

EMERGING OPTIMISM
Other currencies also rose. The Australian dollar rose 0.2%
to 75.927 U.S. cents, while its New Zealand counterpart added
0.3% to 71.19 U.S. cents.
The Chinese yuan gained 0.2% to 6.5192 per dollar in the
offshore market CNH=EBS . It changed hands onshore at 6.5310
per dollar CNY=CFXS while other heavyweight emerging market
currencies, including the Korean won KRW= , Mexican peso MXN=
and South African rand ZAR= were also higher. EMRG/FRX
Bitcoin slipped 2.4% to $26,367 BTC=BTSP , continuing its
retreat from the all-time high of $28,377.94 it had set on
Sunday.
In the bond markets, benchmark German 10-year government
bond yields sank another basis point to -0.57% DE10YT=RR and
outperforming 10-year Treasury yields, which were fractionally
higher at 0.945% after a U.S. bond auction. US10YT=RR
Yields on 10-year Southern European bonds - deemed riskier
with lower credit ratings - fell a touch too. Bond yields move
inverse to price. IT10YT=RR , ES10YT=RR , PT10YT=RR