USD weakens on trade data, demand

Story link: USD weakens on trade data, demand

The US dollar weakened Tuesday after increased risk appetite reduced demand for the greenback, while the euro strengthened on remarks from European Central Bank president Jean-Claude Trichet indicating that Bank officials believe the economy is beginning to get better.

Mr. Trichet’s comments raised the possibility that the recent cut in Eurozone interest rates could be the last reduction for the time being.

The greenback continued to weaken after new data showed that the US trade deficit widened in March for the first time in 8 months as both exports out of and imports into the United States fell.

The good news was that while the US trade gap was at $27.6 billion in March, analysts had expected that it would rise to $29 billion.

At around 10:30 a.m. in New York the dollar traded at $1.3643 to the shared currency while it took ¥96.6 to buy a dollar and ¥132.65 to buy a euro.

Meanwhile, the pound saw gains on improving economic data in the UK, where industrial production declined again in March, according to the Office for National Statistics, but the pace of declines had slowed from recent months.

Additionally, although more real estate agents and surveyors saw house prices fall in April than reported price gains, but the difference between the number of those seeing declines and those seeing gains was the smallest in over a year, according to the Royal Institution of Chartered Surveyors, while the British Retail Consortium said that UK retails sales were up in April compared to April of last year.

At mid-morning in New York, the pound traded at 89.5p to the euro while it took $1.5244 to buy a pound.