U.S. trade deficit widens in October, trade contribution to Q4 GDP likely to be lower

U.S. advanced goods trade deficit for the month of October widened above expectations. The nation recorded a deficit of USD 62 billion in October, as compared with consensus expectations of USD 59 billion. Nominal exports fell 2.7 percent in sequential terms, after four straight months of positive growth. All categories of export, barring other goods, registered negative growth. Food, feeds & beverages, consumer goods and industrial supplies recorded huge losses sequentially in October.

On the contrary, nominal imports of goods rose 1.1 percent in sequential terms, as compared with September’s decline of 1 percent. This reversed September’s losses. Capital goods, consumer goods excluding autos and other goods imports registered strong growth in October. However, imports of auto fell in October. Preliminary data on wholesale inventories that was included in the advance trade report recorded a decline of 0.4 percent in sequential terms, noted Barclays in a research report.

The advance trade report of October has lowered Barclays Q4 GDP tracking one-tenth, to 2.3 percent quarter-on-quarter. The October report cut the trade contribution and inventory accumulation to the fourth quarter GDP estimate, whereas investment equipment is slightly higher than the assumption, added Barclays.

At 05:00 GMT the FxWirePro's Hourly Strength Index of USD was highly bearish at -137.43. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex