Dollar Advances After Report Shows U.S. Trade Deficit Narrowed

The dollar had its biggest gain against the euro in two weeks after the U.S. trade deficit narrowed for the first time in six months, helped by exports that surged to a record. Increased demand for the dollar helped the currency rebound from a four-month low against the euro and sent it higher against the other 15 most-traded currencies tracked by Bloomberg, including the Japanese yen, as well as the Canadian and Australian dollars. ``Expectations were that the deficit could have reached $50 billion -- it's a relief that it didn't,'' said Robert Lynch, a currency strategist in New York at BNP Paribas SA, France's second-largest bank by assets. ``The dollar could recoup some of its losses, especially given how far it has fallen since June.'' The dollar may rise to $1.2250 in the next few days, he said. Against the euro, the dollar strengthened to $1.2323 per euro from $1.2409 late yesterday, according to EBS, an electronic currency dealing system. It was the biggest gain since June 29. The dollar also rose to 108.96 yen from 108.25 late yesterday. The $46 billion gap in goods and services trade followed a record deficit of $48.1 billion in April, the Commerce Department said in Washington. The 4.5 percent reduction in the deficit in May was the largest since October 2002.