USD Extends Gains on Jobless Claims, Narrowing Trade Deficit

ForexNewsNow | Published on November 10, 2010 at 1:03 pm

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us-dollarNEW YORK (Forex News Now) – The dollar extended previous gains against the euro and yen in realtime forex trading today after two favorable economic reports on jobless claims and the trade deficit were released.

The U.S. Commerce Department announced that the goods and services trade deficit narrowed in September, dropping to $44 billion from a previous figure of $46.5 billion in August.

Total exports came in at $154.1 billion, while total imports were $198.1 billion.  The goods deficit dropped $2.2 billion, while the services surplus gained $0.2 billion to $12.9 billion.

A decline in consumer goods drove the rise in the goods deficit, but the import of capital goods actually rose – a promising sign suggesting that manufacturers and businesses are becoming more active.

Overall, the report was positive news, suggesting that there may be an upward revision to the third quarter’s GDP growth rate of 2.0%, suggested Capital Economics economist Paul Dales.

The trade deficit with China still remained large, though, on the back of a 30% increase in trade between the two countries.  Critics of Chinese monetary policy blame the weak yuan – and Chinese policies to keep it that way – on the growing deficit between the two countries, an issue that could be discussed extensively in the G20 meetings set to begin this week.

Other realtime forex news came into play today with the release of the weekly jobless claims report for the week ending on November 6th. The number of workers filing initially for unemployment benefits dropped from 459,000 in the previous week to 435,000.  Also, the four-week moving average also fell to its lowest point since September, 2008.

Analysts were cautiously optimistic. “Jobless looks a little better than expected. The trend seems to be getting better, though certainly there’s way too many as far as unemployed out there,” said Jay Suskind, the senior vice president at Duncan-Williams.

The dollar responded well to both economic reports, gaining in realtime forex trading on both the euro and the yen.  USD/JPY rose 1.31% to 82.78 before falling back to a 0.94% gain to 82.48, its highest mark since the beginning of October.

The dollar also picked up 0.57% on the euro.  EUR/USD now stands at 1.3692 for the day.

USD did experience losses against the Canadian dollar (down 0.24%) and pound (down 0.27%), but rebounded nicely against its main forex trading partners.

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