Investing.com - The dollar was close to the day’s highs against a basket of the other major currencies on Wednesday after data showing that the U.S. trade deficit narrowed in March offset weaker than expected U.S. private sector hiring figures.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.14% to 93.14.
The index had hit a low of 91.89 on Tuesday, the weakest level since January 2015.
The dollar was boosted after data showing that the U.S. trade deficit shrank to $40.4 billion in March, as imports fell 3.6% to their lowest level since 2010.
Economists’ had expected the U.S. trade deficit to narrow to $41.50 billion.
The report was seen as likely to boost up the government’s revisions to first quarter growth.
The dollar’s gains were held in check after another report showing that U.S. private sector hiring grew at the slowest rate in three years in April.
Payrolls processor ADP said nonfarm payrolls rose by 156,000 last month, the smallest increase since April 2013 and well below forecasts for jobs growth of 196,000.
Private payroll gains in the month earlier were revised down to 194,000 from an originally reported 200,000 increase.
The ADP figures come ahead of the U.S. government’s nonfarm payrolls report on Friday, which is expected to show that the economy added 202,000 jobs last month.
Investors were also looking ahead to industry data on U.S. service sector activity later Wednesday.
The dollar edged lower against the yen, with USD/JPY easing to 106.57, holding above Tuesday’s lows of 105.54, the weakest level since October 2014.
The dollar has come under heavy selling pressure in recent sessions after the Federal Reserve left interest rates unchanged last week and indicated that it would stick to a cautious approach on future interest rate hikes.
Recent U.S. economic reports, including data on Tuesday showing that manufacturing activity dipped in April, reinforced expectations that interest rates will remain on hold for longer.
Higher rates tend to boost the dollar, as they make the greenback more attractive to yield-seeking investors.
A decision by the Bank of Japan last week not to implement additional monetary easing measures sent the yen surging higher, adding to pressure on the dollar.
EUR/USD was steady at 1.1491, pulling away from Tuesday’s highs of 1.1615, the highest level since August.