Dollar remains broadly higher on U.S., euro zone growth worries

Investing.com - The U.S. dollar remained broadly higher against the other major currencies on Friday, as concerns over the outlook for growth in the U.S. and the euro zone clouded market sentiment, ahead of key U.S. budget talks.

During U.S. morning trade, the dollar was sharply higher against the euro, with EUR/USD shedding 0.59%% to 1.2720.

The euro extended losses against the dollar after official data showed tht U.S. industrial production fell unexpectedly in October, ticking down 0.4% after a 0.2% rise the previous month. Analysts had expected industrial production to rise 0.2% in October.

A separate report showed that the U.S. capacity utilization rate declined to 77.8% in October from 78.2% the previous month, disappointing expectations for an increase to 78.3%.

Investors were also cautious ahead of highly anticipated talks between U.S. President Barack Obama and Republican lawmakers on how to resolve the country’s "fiscal cliff" later in the day.

Approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

The euro weakened earlier, after the European Central Bank said in a report that the euro zone's current account surplus narrowed more-than-expected in August, declining to EUR0.8 billion from an upwardly revised EUR10.9 billion the previous month.

Analysts had expected the current account surplus to narrow to EUR9.2 billion in August.

Also Friday, official data showed that the euro zone's trade surplus expanded to EUR11.3 billion in September, more than the expected rise to EUR10.6 billion, from a surplus of EUR9.9 billion the previous month.

The greenback was higher against the pound, with GBP/USD edging down 0.16% to 1.5841.

Elsewhere, the greenback trended higher against the yen and the Swiss franc, with USD/JPY adding 0.13% to trade at 81.27, and USD/CHF climbing 0.65% to 0.9482.

The yen remained under pressure however, after Japan's main opposition leader from the Liberal Democratic Party (LDP) and possible next prime minister, Shinzo Abe, earlier said that the upcoming election would be about which party could boost a stagnant economy.

Japan dissolved parliament's lower house on Friday for a December 16 election that is likely to return the long-dominant Liberal Democratic Party (LDP) to power with a conservative former prime minister at the helm.

Meanwhile, Swiss National Bank Chairman Thomas Jordan reiterated his will to maintain the EUR/CHF cap at 1.20, adding that an overvalued Swiss franc remains a burden for the nation's economy.

The greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD edging up 0.17% to 1.0027, AUD/USD slipping 0.20% to 1.0311 and NZD/USD slipping 0.14% to 0.8081.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.44% to 81.44.