* Fed's Rosengren says stimulus should only be removed gradually
* Swiss franc falls sharply as reserves data weighs
* Euro resists more falls, helped by inflation data
* Focus this week on Fed minutes, U.S. jobs data
NEW YORK, Jan 7 (Reuters) - The dollar rose to a one-month high on Tuesday, buoyed by U.S. trade deficit data that is expected to boost estimates for fourth-quarter growth in the world's largest economy. The U.S. trade deficit in November narrowed to its lowest level in four years, as exports hit a record high and weaker oil prices restrained import growth, the latest evidence of strengthening economic fundamentals. The measure is included in the calculation of gross domestic product, so the narrowing of the deficit could prompt economists to bump up their U.S. growth estimates for the last quarter of 2013. "Today's trade figures helped investors look past (Monday's) disappointing services data and bolsters hopes for a faster recovery this year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. However, Boston Federal Reserve Bank President Eric Rosengren, one of the Fed's more dovish policymakers, on Tuesday said the economy remains vulnerable the longer inflation remains too low and he again warned that policy stimulus should be removed "only gradually." In afternoon trading, the dollar was 0.28 percent higher at 104.53 yen, but remained below a five-year peak of 105.44 yen set last week. The dollar touched as low as 104.18 yen on Monday, its lowest since Dec. 23. The dollar index, which tracks the greenback against a basket of six major currencies, was last up 0.23 percent at 80.840. It hit a high of 80.946, its strongest level since Dec. 3.
LOONIE PLUNGES The Canadian dollar, meanwhile, fell broadly on Tuesday after a round of soft economic data. Activity by Canadian purchasing managers nosedived unexpectedly in December, while the country posted a big trade deficit a month earlier.
The Canadian currency's losses pushed the greenback to its highest level since May 2010. The U.S. dollar was last up 1 percent at C$1.0764. "From a fundamental perspective, this morning's data release of a significantly worse-than-expected November trade deficit has weighed further on the Canadian dollar and is likely to impart a negative tone to investor sentiment" said Samarjit Shankar, director of market strategy, at BNY Mellon in Boston. "Moreover, it is clear that asset markets activity of real-money investors in recent weeks has contributed to loonie weakness," he added.
SWISSIE EYED The euro rose 0.45 percent to 1.2374 francs, its highest since October and above the 1.20-per-euro cap which the SNB has held in place for more than two years. Against the dollar, the franc also lost ground with the greenback up 0.52 percent to $0.9085 francs. Data on Tuesday showed Swiss National Bank foreign currency reserves fell by almost 700 million francs in December, suggesting pressure on its cap on the franc - which previously forced it to buy billions of euros - had eased. "We expect more Swiss franc downside from here given that the Swiss franc remains excessively overvalued," said Valentin Marinov, G10 strategist at CitiFX, a division of Citigroup in London. Looking ahead, currency trading will likely be swayed by Friday's U.S. jobs report, which may give clues as to how quickly the Fed will taper its bond buying. In addition, market participants will focus on minutes from the Fed's last monetary policy meeting, scheduled for release on Wednesday. Meanwhile, the euro was helped by a euro zone inflation number which was not expected to be low enough to force the European Central Bank into more action immediately to loosen monetary policy. The ECB meets on Thursday. German retail sales and unemployment data were also better than expected, while Ireland's successful bond issue offered more optimism on countries in the bloc under sovereign bailout programs. The euro rose as high as $1.3656, but last traded down 0.08 percent at $1.3615, remaining above Monday's one-month low of $1.3570, according to Reuters data.