U.S. trade deficit widens in December, driven by rise in imports and fall in exports

U.S. trade deficit widened in the month of December. The advance goods trade deficit broadened to USD 79.5 billion from USD 70.5 billion a month earlier. The widening of deficit was mainly because of a rise in imports and decline in exports. The December print came in below expectations of a deficit of USD 73.6 billion.

The goods deficit has been widening since June 2018, barring November, when the deficit narrowed unexpectedly. This has been led mainly by higher imports and is in line with the view that a fiscal stimulus-led boost to demand is expected to encourage higher imports and, consequently lead to wider trade deficits in 2019, noted Barclays in a research report.

Total exports dropped 2.8 percent sequentially, led by industrial supplies, capital goods, and foods, feeds, & beverages. On the imports side, total imports were up 2.4 percent sequentially after falling sharply in the prior month. This was due to a strong rise in capital goods and consumer goods imports, which bodes well for investment and consumption spending, respectively.

Meanwhile, retail inventories in the U.S. came in stronger than expectations, rising 0.9 percent sequentially, while the final estimate for December wholesale inventories was unrevised at a solid 1.1 percent sequentially.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -17.5915 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex