U.S. trade deficit widens above expectations in October

Trade deficit in the U.S. widened in October, coming a bit more subdued than expected. The deficit widened to USD 48.7 billion in the month, as compared with consensus expectations of USD 47.5 billion. Moreover, the trade deficit for September was upwardly revised by USD 1.4 billion. The widening in trade deficit was mainly driven by stronger than expected rise in imports, which grew 1.6 percent sequentially, while growth in exports stayed flat.

Moreover, most of the deterioration in the trade balance was due to goods trade, as the advanced trade balance report released recently indicated. Services trade balance stayed widely the same at USD 20.3 billion, consistent with expectation.

Delving into details, most categories on the imports side indicated a strong rise sequentially, led by industrial supplies and consumer goods. Meanwhile, on the exports side, goods exports dropped 0.2 percent sequentially, driven by a large drop in food & beverage exports and weakness in capital goods, automotive and consumer goods categories. Meanwhile, services exports grew a stable 0.5 percent.

“The October trade balance report was weaker than we had anticipated, and coupled with the downward revision to September’s trade balance, implies a lower contribution from the net exports sub-component to Q4 GDP growth”, said Barclays in a research report.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 45.6063. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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