U.S. trade deficit widens above expectations in February

The U.S. trade deficit widened in February, coming in above consensus expectations. Trade deficit broadened to USD 57.6 billion, as compared with consensus expectations of USD 56.8 billion. The miss relative to the projection came from the services side of the report. Services trade surpluses dropped a bit to USD 19.4 billion from USD 20 billion, as compared with the anticipated stable surplus. On the goods side, the figure came in line with what was recorded in the advance goods trade balance report.

Delving into details, imports and exports came in strong in February. Total exports grew 1.7 percent after a subdued figure in January. Within exports, goods exports rose 2.3 percent sequentially, driven by automotive, industrial supplies and capital goods. Meanwhile, total imports grew 1.7 percent sequentially, rebounding after the flat reading in the prior month. The rebound was driven by imports of capital goods, which recovered by 3.3 percent. Moreover, imports of food & beverages and industrial supplies also recorded healthy rises.

“We take a positive signal from the import side of the report, especially with regard to capital goods, as this bodes well for investment activity in the near future”, noted Barclays in a research report.

The February trade deficit came in slightly wider than anticipated, implying net exports relative to what was estimated. In the meantime, capital goods imports were largely countered by equal strength in capital goods exports.

At 13:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bullish at 75.8798. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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