U.S. trade deficit widens in December

Trade deficit in the U.S. widened in the month of December, coming in above expectations. Deficit broadened to USD 53.1 billion. The advance report on goods trade balance, which was released earlier in the month, recorded a broadening of the goods trade deficit by USD 1.7 billion. Thus, the incremental information in the report released today is the balance on services trade, which came in lower than anticipated, noted Barclays in a research report.

Delving into details, the trend continues to be one of stronger imports growth driving the trade balance lower. However, exports growth has also been strong in the last two months, advancing from favorable external demand conditions. Total imports rose 2.5 percent sequentially, driven by consumer goods and automotive. Solid consumer confidence, along with a high ratio of consumption to income has boosted imports.

Exports rose 1.8 percent sequentially, stimulated by food and beverage products, industrial supplies and capital goods. Services exports rose modestly by 0.2 percent sequentially. Overall, the goods trade balance continues to be in deficit, while the surplus in services trade dropped slightly in December to USD 20.2 billion.

“The December trade deficit was a touch wider than what we had penciled in, and suggests a slightly larger drag from trade relative to what the BEA reported in its release of advance GDP. However, after rounding, our Q4 GDP tracking estimate was left unchanged at 2.6%”, added Barclays.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 41.0547. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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