Dollar holds gains vs. rivals on Fed taper speculation

The dollar remained broadly higher against the other major currencies on Friday, as growing speculation the Federal Reserve could soon begin tapering its stimulus program continued to support demand for the greenback.

During U.S. morning trade, the euro was lower against the dollar, withEUR/USD retreating 0.73% at 1.3321.

In a preliminary report, the University of Michigan said its consumer sentiment index ticked down to 72.0 in November, from a reading of 73.2 the previous month, disappointing expectations for a rise to 74.5. 

The report came after the Bureau of Labor Statistics said the U.S. economy added 204,000 jobs in October, beating expectations for a 125,000 increase, after an upwardly revised 163,000 rise the previous month. 

The U.S. unemployment rate ticked up to 7.3% last month, from 7.2% in September, in line with expectations. 

The strong employment data added to expectations that the Fed could begin scaling back its asset purchase program as soon as next month. 

Meanwhile, sentiment on the euro remained vulnerable after European Central Bank President Mario Draghi confirmed on Thursday that the bank cut its benchmark interest rate to a record low 0.25% from 0.5% and signalled the possibility of further rate cuts. 

The greenback was also higher against the pound, with GBP/USD down 0.84% at 1.5960.

Official data earlier showed that the U.K. trade deficit widened to GBP9.82 billion in September, from GBP9.56 billion the previous month, which had been revised from a previously estimated deficit of GBP9.63 billion. 

Analysts had expected the trade deficit to narrow to GBP9.20 billion in September. 

The dollar was higher against the yen and the Swiss franc, with USD/JPYjumping 1.12% at 99.18, and with USD/CHF gaining 0.93% at 0.9242. 

In Switzerland, official data showed that retail sales rose 1% in September from a year earlier, less than the expected 2.5% increase, after an upwardly revised 2.5% advance in August.

The dollar was broadly higher against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.36% at 1.0496, AUD/USDdeclining 1.04% at 0.9356 and NZD/USD tumbling 1.17% at 0.8227. 

Official data showed that the Canadian economy added 13,200 jobs in October, disappointing expectations for a 14,000 increase, after a 11,900 rise the previous month. 

Canada's unemployment rate remained unchanged at 6.9% last month, confounding expectations for an uptick to 7.0%. 

The Aussie came under pressure after the Reserve Bank of Australia forecast below-trend growth and rising unemployment in 2014, signalling the possibility for further rate cuts in the future. 

The export-related currencies found some support after data earlier showed that China's exports rose 5.6% in October from a year earlier while imports increased 7.6%, resulting in a USD31.1 billion trade surplus. 

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.74% at 81.50.