http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=81a6b0d1-e243-4b3f-b8d3-15cab26943aaThe dollar fell against other major currencies Tuesday after a government report showed the U.S. trade gap widened more than expected in December.
The trade gap widened by 5.3% in December to $61.2 billion, the Commerce Department said Tuesday. Analysts surveyed by MarketWatch had expected the deficit to increase to $59.5 billion. For all of 2006, the U.S. posted a record trade deficit of $763.6 billion.
The data are "dollar bearish," said T.J. Marta, fixed-income strategist at RBC Capital Markets. "This report will likely cause a further downward revision to" fourth-quarter gross domestic product, he said.
In New York trading, the euro stood at $1.3022, compared with $1.2961 late Monday. The dollar was quoted at 121.28 yen, compared with 121.94 yen.
The British pound traded at $1.944, compared with $1.9474. The dollar changed hands at 1.2486 Swiss francs, compared with 1.2532 francs.
The euro fetched 157.97 yen, compared with 158.05 yen.
Brian Dolan, director of research at Forex.com, a division of Gain Capital, said while the December data come in wider-than-expected, the overall U.S. trade deficit continues to show signs of stabilization. As a result, "any dollar-negative reaction based on the data should be short-lived."
Bernanke ahead
Losses in the dollar were limited as traders await Federal Reserve Chairman Ben Bernanke's congressional testimony later in the week.
Bernanke is scheduled to present his semiannual report on monetary policy to Congress at the Senate Banking Committee on Wednesday and at the House Financial Services Committee on Thursday.
Michael Woolfolk, senior currency strategist at The Bank of New York, said with the market "surprised at the less-hawkish tones" struck in the latest Fed interest-rate meeting statement, "the risk is that Bernanke may bolster his inflation-fighting credentials by highlighting upside risks to U.S. growth and inflation in 2007."
Ahead of testimony tomorrow, "the market is unlikely to push the euro through the top end of its recent range -- $1.3040-50," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
Growth data boost euro
Meanwhile, the euro gained after data showed economic growth in countries that use the currency jumped in the fourth quarter, as Italian growth advanced sharply from the last quarter and Germany's acceleration continued.
The Eurostat statistics office said the euro-area economy grew 0.9% in the fourth quarter from the third, or up 3.3% annually. That puts the European economy nearly on par with the 3.4% annual growth recorded in the U.S. during the same time frame.
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