The US dollar continued to be higher against its major counterparts in the European session on Thursday, buoyed by reducing fears over a trade war between the US and China after Washington expressed willingness to negotiate a resolution for proposed tariffs.
News that officials from US and China had signaled their desire for talks about the recently proposed tariff plans reduced fears over trade spat.
Recently appointed White House economic advisor Larry Kudlow said President Donald Trump’s strident approach could be a tactic to get China to negotiate on trade practices.
Data from the Commerce Department showed that the US trade deficit widened more than anticipated in February.
The Commerce Department said the trade deficit widened to USD57.6 billion in February from a revised USD56.7 billion in January.
Economists had expected the trade deficit to widen to USD56.8 billion from the USD56.6 billion originally reported for the previous month.
The wider than expected trade deficit in February was the widest since the USD60.2 billion trade deficit recorded in October of 2008.
A separate report from the Labor Department showed a bigger than expected increase in initial jobless claims in the week ended March 31st.
The report said initial jobless claims climbed to 242,000, an increase of 24,000 from the previous week’s revised level of 218,000.
Economists had expected jobless claims to rise to 225,000 from the 215,000 originally reported for the previous week.
Traders now look ahead to the release of the Labor Department’s more closely watched monthly jobs report on Friday.
Employment is expected to increase by 198,000 jobs in March after spiking by 313,000 jobs in February. The unemployment rate is expected to dip to 4.0% from 4.1%.
The currency has been trading in a positive territory in the Asian session.
The greenback climbed to a 2-1/2-month high of 0.9638 against the franc, from a low of 0.9598 hit at 5:30 am ET. The greenback is seen finding resistance around the 0.99 region.
The greenback spiked up to 1.2236 against the euro, its highest since March 1. On the upside, 1.99 is seen as the next resistance level for the greenback.
Final data from IHS Markit showed that Eurozone private sector activity expanded at the weakest pace since the start of 2017 as rates of growth moderated in both manufacturing and services.
The composite output index fell to 55.2 in March from 57.1 in February. The score was also below the flash estimate of 55.3.
The greenback hit more than a 2-week high of 1.4001 against the pound, from a low of 1.4097 hit at 8:45 pm ET. The greenback is likely to find resistance around the 1.39 region.
Survey data from IHS Markit showed that the UK service sector expanded at the weakest pace since July 2016 due to bad weather.
The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index fell more-than-expected to 51.7 in March from 54.5 in February. The score was forecast to drop to 54.0.
The greenback bounced off to 0.7679 against the aussie, 0.7276 against the kiwi and 1.2801 against the loonie, from its early 9-day low of 0.7726, multi-week lows of 0.7322 and 1.2746, respectively. The next possible resistance for the greenback is seen around 0.75 against the aussie, 0.69 against the kiwi and 1.30 against the loonie.
Extending early rally, the greenback strengthened to more than a 3-week high of 107.24 against the yen. Further uptrend may take the greenback to a resistance around the 108.00 level.