The US dollar stabilised as liquidity thinned entering the Asian time zone, having weakened as deficit concerns resurfaced ending several days of gains. Asian trading is likely to be light with Japan and several other countries in the time zone closed for holidays. The dollar has rallied over the past week on the expectation that the worst of the country's twin fiscal and trade deficits had passed after comments last Friday by Federal Reserve Chairman Alan Greenspan.
The December US trade deficit released on Thursday narrowed to $56.4 billion in December from a November shortfall revised lower to $59.3 billion.
The overall deficit reached a record $617.7 billion in 2004.
The USD was $1.2873/77 versus the euro compared with $1.2877 in New York and $1.2802 on Wednesday
Against the yen, the dollar was 105.84/88 yen against 105.82 yen in New York and 105.63 previously.
The dollar had hit a three-month high of 106.86 yen due to tensions in Asia after North Korea pulled out of multilateral talks and admitted to having nuclear weapons.
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