US dollar strengthens versus euro
April 12, 2006
The US dollar was stronger in relation to other currencies on Wednesday on new data showing that the US trade deficit had gotten smaller. After consideration of the new figures, however, investors sent the greenback slightly lower again for a mixed day overall.
The trade deficit shrunk by $2.9 billion in February to $65.7 billion, while the bilateral deficit with China dropped by $4.1 billion, from $17.9 billion to $13.8 billion. This unexpectedly large decline in the deficit with China was at least partly due to the timing of the Chinese New Year. The bilateral deficits with the European Union and Canada were also lower. The US exported goods and services worth $113 billion in February, $1.3 billion less than in January. However, imports declined even faster and were down by $4.2 billion to $178.7 billion.
At one point in the day, the dollar had risen to $1.2067 versus the euro, but when analysts concluded that the lower deficit was likely not the beginning of a trend, the dollar weakened. While it eventually settled at $1.2109 in relation to the euro, 0.2 percent higher, the greenback lost 0.1 percent against the Japanese yen, to ¥118.46.