The U.S. dollar gave up its early advance on Tuesday, following a report showing that the U.S. trade deficit widened to more than a 6-year high in March.
The data from the Commerce Department showed that the trade deficit soared to $51.4 billion in March from a revised $35.9 billion in February. Economists had expected a significantly smaller deficit of about $42.0 billion.
The much wider than expected deficit in March reflected the largest U.S. trade deficit since the $60.2 billion gap seen in October of 2008
Traders now await U.S. service sector data due shortly, along with reports on private sector employment on Wednesday and jobs data on Friday for more clues about the economy.
The greenback was higher in European deals, adding onto yesterday’s gains. The currency managed to correct its sharp losses in recent sessions, as some upbeat economic reports helped support the view that early soft patch was due to temporary factors.
The greenback depreciated to 1.5170 against the Sterling, down by 0.54 percent from an early high of 1.5088. The next possible support for the greenback may be located around the 1.525 mark.
British construction sector expansion slowed for a second month in a row in April, marking the weakest pace in nearly two years, amid sluggish output and new order growth, survey data from Markit Economics revealed.
The Markit/CIPS UK Construction Purchasing Managers’ Index fell sharply to 54.2 from 57.8 in March. Economists had forecast a modest drop to 57.4. A PMI reading above suggests growth in construction activity.
The greenback, having advanced to a 6-day high of 1.1065 against the European currency in early deals, turned lower with pair trading at 1.1147. On the downside, the greenback may challenge support around the 1.12 area.
Figures from Eurostat showed that Eurozone producer prices declined as expected in March.
The producer price index fell 2.3 percent year-over-year in March, slower than previous month’s 2.8 percent decrease. The figure was also matched with economists’ expectations.
The dollar has been weaker against the franc, trading around early 4-day low of 0.9296. This is a 1.09 percent decrease from a 5-day high of 0.9412 hit at 4:30 am ET. If the greenback continues its downtrend, 0.92 is seen as its next support level.
The greenback pared gains to 120.05 against the Japanese yen, off its early more than 3-week high of 120.50. The greenback may challenge support around the 119.5 area.
The greenback fell to a 5-day low of 1.2046 against the Canadian dollar, after advancing to 1.2130 in early deals. Continuation of the greenback’s downtrend may lead it to a support around the 1.18 region.
The material has been provided by InstaForex Company – www.instaforex.com