Forex News – Dollar surges after US trade deficit narrows and jobless claims fall

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The dollar extended gains against the euro and most other major counterparts today after U.S. data showed new claims for unemployment benefits fell last week more than predicted.

Initial jobless claims dropped by 1,000 to a seasonally adjusted 404,000, beating expectations of a rise to 405,000.

This suggest fewer layoffs of American workers, which is somewhat reassuring despite slow growth in the United States.

The data today adds to recent non-farm payroll data that showed an increase of 103,000 jobs in September from 57,000 the prior month.

Meanwhile, a separate report from the Commerce Department showed the U.S. trade deficit narrowed to $45.61 billion in August from $45.63 billion in July, beating expectations for the trade gap to widen to $45.8 billion.

The trade report also showed that the U.S. trade gap with China widened to a record high as imports hit an all-time high of $37.4 billion. The U.S. Congress has been considering legislation to penalize China for its trade and currency practices, and argue that China is manipulating its currency and deliberately not allowing it to appreciate.

On Tuesday , the U.S. Senate approved a bill aimed at forcing China to push the Chinese currency higher against the dollar, which supporters argue would reduce a U.S. trade deficit with China of more than $250 billion. The bill now has to pass through the House of Representatives.

The vote on Tuesday “has put the Chinese on notice: ‘Stop your cheating that is costing our country jobs, or you will face the consequences,’” said Democratic Senator Charles Schumer, one of the bill’s co-sponsors.