1 month ago
Forex

Dollar Rides Euro Weakness to 2-Week Highs

Investing.com – The U.S dollar hit two-week highs against its rivals Wednesday after data showed the U.S. trade deficit narrowed

Investing.com – The U.S dollar hit two-week highs against its rivals Wednesday after data showed the U.S. trade deficit narrowed by more-than-expected, while weakness in the euro also lifted sentiment.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.32% to 96.12.

The trade deficit — which measures the gap between what the United States imports and what it exports — narrowed to $49.3 billion in November, down $55.70 billion the prior month. That was better than economists' expectations of $54.0 billion.

The upbeat trade data comes just hours before Federal Reserve Chairman Jerome Powell is due to give remarks, which may offer clues on monetary policy, at a town hall meeting with teachers in Washington D.C. The speech starts at 7:00 PM ET (24:00 GMT).

EUR/USD hit two-week lows against the dollar, falling 0.40% to $1.1367 as weaker-than-expected German factory orders data underscored the weakness in the country's broader economy, which analysts said continues to drift toward a recession.

A Deutsche Bank (DE:DBKGn) forecast says German GDP will contract this quarter after recent business surveys pointed to companies' worsening expectations.

GBP/USD fell 0.02% to $1.2940 against the dollar as the European Union showed little sign of flexibility in renegotiating the UK withdrawal agreement, which sets out the terms on which Britain will depart from the European Union on March 29.

European Council President Donald Tusk said Wednesday that the EU had decided in December that the Withdrawal Agreement was "not open for renegotiation".

The weakness in the pound comes a day ahead of the Bank of England's monetary policy decision. The BoE is expected to hold rates steady, and reiterate that its policy stance going forward will be dominated by the Brexit deal -- if any -- that the U.K. government will deliver. The bank's base rate is 0.75%.

Elsewhere, USD/CAD rose 0.57% to $1.3199 as the loonie came under pressure after the Ivey purchasing managers index undershot economists' forecasts. Some of the decline was pared as oil prices rose on data showing U.S. crude supplies rose by less than expected last week.

USD/JPY rose 0.01% to Y109.98.