Dollar Rises on U.S. Trade Data

New York (Jan 8)  The dollar climbed against most major currencies Tuesday, after data showed the U.S. trade deficit fell to its lowest level in four years in November, boosting expectations for economic growth in the last month of the year.

U.S. exports rose to a seasonally adjusted $194.86 billion, their highest level on record, the Commerce Department said Tuesday. Imports fell, leading to the smallest trade gap since late 2009 when the aftermath of the recession hit demand for many products.

Market players have kept a close eye on U.S. economic data, as they try to gauge the pace at which the Federal Reserve will cut its monthly bond purchases, which have buoyed the economy while weakening the dollar. The Fed announced the first such cut last month, when it said it would reduce bond purchases buy $10 billion in January, to $75 billion.

Tuesday's trade data "was consistent with an economy making steady progress, keeping the Fed on a tapering path," said Joe Manimbo, chief market analyst at Western Union, in a note to clients.

The greenback recently traded at Y104.54 against the yen, gaining 0.3%. It traded at CHF0.9092, notching a 0.6% gain. The euro lost 0.15 against the dollar to $1.3615, while the Australian dollar recently traded at $0.8919, a 0.5% decline.

Investors are awaiting the publication of minutes from the Fed's December meeting, scheduled for release on Wednesday afternoon, to provide further insight into the central bank's thinking on monetary policy. Friday's non-farm payroll data, meanwhile, is expected to give a clearer measure of how much strength the U.S. recovery has gained.

Meanwhile, the Bank of England will deliver its first monetary policy decision of the year Thursday, as will the European Central Bank's governing council.