U.S. dollar falls broadly after trade deficit data

NEW YORK - The dollar fell across the board on Friday after data showed the U.S. trade deficit widened by much more than expected in September.

The euro also gained after news that the euro zone economy had finally pulled out of recession in the third quarter.

The U.S. trade deficit widened in September by an unexpectedly large 18.2 percent, the most in more than 10 years, as oil prices rose for the seventh straight month and imports from China bounded higher, government data showed on Friday.

Jacob Oubina, currency strategist at Forex.com in Bedminster, New Jersey, said the trade gap number was concerning “because it comes in an environment when the dollar has been very weak.”

Many economists have hoped that a weaker dollar would stimulate exports and help narrow the U.S. trade imbalances.

“So if we can’t get the trade deficit lower in such circumstances, it’s really not good for growth,” Oubina said.

Wells Fargo said the wider deficit will shave 0.4 percentage points from third-quarter GDP growth.

In early New York trading, the euro gained 0.1 percent to $1.4854. The dollar fell 0.7 percent to 89.73 yen, after hitting a session low of 89.48 yen, according to Reuters data.

The euro zone economy returned to growth in the three months to the end of September, although the quarterly rise of 0.4 percent was slightly less than markets had expected. Economists attribute this to the area’s top three economies falling short of forecasts.

“It’s encouraging to see that the euro zone has returned to growth in the third quarter,” said RBS currency strategist Paul Robson.

The ICE Futures U.S. dollar index a gauge of the greenback’s performance against six major currencies, was down 0.1 percent to 75.507.

Attention will turn to the release of University of Michigan U.S. consumer confidence data, due at about 9:55 am (1455 GMT).