Dollar stable before US trade data

The dollar remained stuck within tight ranges on Thursday ahead of the release of key U.S. trade data later in the session, which economists forecast show a slight improvement. The U.S. trade figures at 1330 GMT are expected to show the deficit narrowed to $66.0 bln in September from the record $69.9 bln the previous month.

However, this may not impress the freshly elected Democrats who seized control of Congress for the first time in 12 years in the U.S. mid-term elections, on back of expectations that they are more likely to take a tougher stance on China when it comes to trade. After a victory in the House of Representatives, Democrats also took control of the Senate.

On Wednesday, China reported a record $23.83 bln trade surplus for October on robust exports, almost doubling from a year earlier and coming after a report earlier in the week that the country’s foreign reserves topped $1 trillion.

Worries about the United States’ ability to fund its deficits were one factor behind the dollar’s sharp slide in the three years through 2004.But investors have become less fearful as foreigners, particularly countries with big trade surpluses, have plowed billions of dollars into U.S. assets each month.

The euro still needs to clear heavy resistance between $1.2810-40 to open the way for a move on $1.2910, then the all-time high since June 06 at $1.2970. Otherwise, a break below $1.2680 is likely to lead to selling, opening the way for a move to $1.2520.

The dollar needs to clear CHF 1.2550 to open the way for gains higher to CHF 1.2710-30 while sterling is seen testing $1.8905 if key support at $1.8990 gives in. The dollar is seen steady against the yen in the big range of 117.10 to 118.90.

The Australian dollar slid 0.5 percent to $0.7665 after data showing a steep drop in employment in October stirred expectations that the country’s central bank may be done raising rates after an increase to 6.25 percent on Wednesday.