FOREX-Dollar advances after data implies stable labor market

By Chuck Mikolajczak

NEW YORK, Feb 19 (Reuters) - The dollar strengthened for a fourth straight session on Thursday after data indicated the economy was on stable footing, giving the Federal Reserve leeway to hold interest rates in check in the near-term.

The Labor Department said weekly initial jobless claims fell by 23,000 to an adjusted 206,000, below the 225,000 estimate of economists polled by Reuters.

"It doesn't look like an economy suffering from higher rates. Even with the pressure from the White House to lower rates, that pressure doesn't really hit until May, so there's no real trend to this information right now," said Joseph Trevisani, senior analyst at FXStreet in New York.

"That's why we're headed back to a range. Without a reason to move, traders are going to be conservative."

TRADE DEFICIT WIDENED

Other data from the Commerce Department showed the U.S. trade deficit widened to $70.3 billion, well above the $55.5 billion estimate.

The dollar index =USD, which measures the dollar against a basket of currencies, rose 0.19% to 97.88, with the euro EUR= down 0.14% at $1.1766. The four-day run of gains for the greenback would mark its longest streak since early January.

The euro fell for a second straight day, extending declines after its biggest daily percentage decline since January 30 on Wednesday after the Financial Times reported that European Central Bank President Christine Lagarde was expected to leave her post before the end of her eight-year term.

Four sources told Reuters that Lagarde has informed colleagues she remains focused on her job and she would tell them first if she was about to step down, a message they took to mean she was not about to resign.

Minneapolis Fed President Neel Kashkari said the labor market has remained "pretty resilient" and that the central bank is close on both mandates of maximum employment and stable prices.

Markets are not pricing in more than a 50% chance for a rate cut of at least 25 basis points from the Fed until its June meeting, according to CME's FedWatch Tool.

Fed minutes released on Wednesday showed policymakers were divided over where to take U.S. rates and suggested that the next chairman, due to start in May, would struggle to push through rate cuts.

Investors were mindful of a reported buildup of U.S. forces in the Middle East and a potential U.S.-Iran conflict, a concern that lifted oil prices. U.S. President Donald Trump said Thursday that "really bad things will happen" if no deal is reached with Iran and the United States will get a deal one way or the other.

Against the Japanese yen JPY=, the dollar strengthened 0.06% to 154.92 while sterling GBP= weakened 0.25% to $1.3457.

Bank of England interest rate-setter Catherine Mann said British inflation data published this week represented "good numbers" although there was not as much improvement in the underlying figures as the central bank had hoped to see.