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Forex - Aussie Drops As October Trade Balance Disappoints

ForexDec 06, 2017 08:24PM ET
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© Reuters. Aussie down in Asia - The Aussie fell on Thursday as the trade balance surplus came in significantly weaker than the previous month and the dollar found favor in Asia.

AUD/USD traded at 0.7547, down 0.21%, while USD/JPY changed hands at 112.41, up 0.12%. GBP/USD traded down 0.09% to 1.3380 as doubts persist about Britain's ability to craft an orderly exit from the European Union.

In Australia, the trade balance for October came in at a surplus of A$105 million,down from a surplus of A$1.604 billion posted in September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.05% to 93.57.

Overnight, the dollar rose against a basket of currencies on Wednesday as ongoing optimism over the progress of tax reform and easing concerns about a possible U.S. government shutdown lifted sentiment.

The dollar shrugged off President Donald Trump’s comments Wednesday that a government shutdown "could happen" as soon as Saturday, as market participants downplayed the likelihood of shutdown.

Amherst's Stephen Stanley said the current plan is reportedly for Congress to pass a two-to-three-week extension, which would avert the possibility of a government shutdown on Saturday.

Also adding to positive sentiment on the greenback was ongoing investor optimism that the final tax bill will reach President Donald Trump for approval before year-end, as the Senate and House of Representatives are set to get talks underway this week to reconciled their respective bills.

The tax cuts, widely viewed as inflationary, are expected to provide a fiscal lift to the US economy, boosting the dollar.

Investors, meanwhile, cheered a better-than-estimated report on private sector job creation, which often serves as a precursor to monthly nonfarm payrolls data slated for later this week.

Private payrolls grew by 190,000 for the month, according to a report released Wednesday by ADP and Moody's Analytics. That beat economists’ forecast of 185,000.

GBP/USD fell as the pair continued to come under pressure amid reports suggesting Brexit talks were unlikely to be resumed this week after talks with the Democratic Unionist Party (DUP) were delayed.

Forex - Aussie Drops As October Trade Balance Disappoints

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