The dollar rose to new highs against the euro and yen on Thursday after a report showed the U.S. trade deficit narrowed more than expected in December.

The gap between exports and imports fell to $56.4 billion in December from a downwardly revised November shortfall of $59.3 billion. Analysts had expected a December deficit of $57 billion.

Against the dollar, the euro dipped to a session low of $1.2740, down about 0.4 percent compared with prices late Wednesday.

The dollar rose to three-month highs against the yen, trading at 106.86 yen from nearly 106.28 yen before the release of data.

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