U.S. trade deficit likely to have widened further in October

U.S. trade deficit had risen a bit in the month of September to USD 43.5 billion. The deficit is expected to have widened further in the month of October, noted Wells Fargo in a research report. In the previous month, exports had risen 1.1 percent, whereas imports had grown 1.2 percent. Exports were partially stimulated by stronger industrial supplies, while the stronger import growth was underpinned by a rebound in capital goods and industrial supplies.

Net exports, in the past three quarters, have contributed marginally to the headline GDP growth. The trend is expected to reverse course in the fourth quarter as solid domestic demand lifts the growth rate of imports above than the more modest rate of export growth. According to Wells Fargo, the trade deficit is expected to widen to USD 47.4 billion. Net exports are likely to negative contribute 0.2 percentage points from the headline GDP growth in the fourth quarter as a whole. This trend is likely to continue into next year as the rate of domestic demand is likely to lead to a more rapid pace of imports than exports, added Wells Fargo.

At 21:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 9.14477. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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