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    Aussie stronger amid narrower trade deficit

    The greenback remained broadly higher against its major counterparts on Wednesday, as the release of optimistic U.S. data bolstered confidence on the strength of the economy.

    The Institute of Supply Management reported earlier on the day that its non-manufacturing purchasing managers’ index advanced to a four-month high of 55.7 in April, from a reading of 54.5 in March. Economists had expected the index to tick up to 54.7.

    A separate report from the U.S. Census Bureau showed that factory orders rose by 1.1%, exceeding expectations for a 0.6% increase. In February, factory orders were upwardly revised to mark a 1.9% fall.

    Meanwhile, official statistics indicated that the U.S. trade deficit narrowed to $40.44 billion in March, as opposed to a downwardly revised reading of $46.96 billion a month before. Economists had expected the trade deficit to narrow to $41.50 billion.

    In addition, ADP reported that non-farm private employment payrolls increased by 156,000 in April, disappointing expectations for a 196,000 rise. In March, the economy added 194,000 new jobs, whose figure was downwardly revised from a 200,000 reading.

    The euro fell 0.13% against the dollar to 1.1484, as the Markit research group reported that its eurozone services PMI dropped to 53.1 last month from 53.2 in the month before, surprising expectations for a flat reading.

    The dollar also edged higher against the sterling and the Swiss franc, with GBP/USD falling 0.39% to 1.4532 and with USD/CHF gaining 0.39% to 0.9578. The British pound was under pressure following Markit’s report, showing that its U.K. construction MPI dropped to 52.0 in April from last month’s reading of 54.2. April’s reading was the lowest since June 2013. Analysts had expected the index to fall down to 54.0.

    Elsewhere, the U.S. dollar rallied 1.08% against its Canadian counterpart to 1.2785, following a report from Statistics Canada showing that the trade deficit widened to C$3.41 billion in March from C$2.47 billion a month before.
    During the Asian session today, the Aussie edged higher 0.66% against the greenback at 0.7505. The Australian Bureau of Statistics reported that retail sales increased by 0.4% in March, exceeding expectations for a 0.3% gain, after rising to 0.1% a month before.

    A separate report also showed that Australia’s trade deficit narrowed to A$2.163 billion in March, as opposed to a downwardly revised reading of A$3.044 billion in February. Economists had expected the trade deficit to narrow to A$2.900.

    The New Zealand dollar also rose 0.35% against the dollar to 0.6905, while the Japanese yen fell 0.1% against the dollar to 107.13. The U.S. dollar index was last steady at 93.20.

    Investors will also be monitoring the Australian HIA new home sales for March on a month-over-month basis, with the previous reading marking a 5.3% fall, as well as data on imports and exports. In the U.K., services PMI is scheduled to be released with an expected reading of 53.5 from 53.7 a month before. The U.S. is also due to release the initial jobless claims, with a projected estimate of 260,000 from 257,000 a month before.

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