News and opinion from the ground
US Trade Deficit Shrinks: Good Or Bad?
Fri, May 9 2008, 16:09 GMT
by Grace Cheng
GraceCheng.com
Friday’s data showed that the US trade deficit unexpectedly narrowed in March, shrinking to $58.2 billion from $61.7 billion in February (initial estimate was $62.3 billion). This 5.7% decline was more than what most analysts had expected as they had predicted the gap would narrow to $61.3 billion. At first glance, this is good news for the US dollar as it shows that the deficit is narrowing and not ballooning. However, what caused the trade gap to narrow was not an increase in exports, but a sharp decrease in imports.
Imports into the US fell $6.1 billion to $206.7 billion, which was the biggest drop ever recorded. In terms of percentage, it was the biggest drop since December 2001. Not only was there lower demand for overseas products and goods, the weakening dollar also made those foreign goods more expensive to purchase. This big drop in imports only reinforces the overall view that American consumers are tightening their belts, choosing to spend their salary on basic necessities.
Import of autos, consumer goods, industrial supplies and capital goods all fell in March. US exports in March totaled $148.5 billion, the second highest amount ever recorded, but was a decline from February. Overseas buyers are finding US goods cheaper to buy due to their stronger domestic currencies relative to the weak dollar. While the narrowing trade gap may help the US dollar in the short-term due to less outflow of dollars, it doesn’t mean that the US economy wouldn’t slide into recession. Harvard University economist Martin Feldstein, who is also President of the National Bureau of Economic Research, said on Tuesday that the US economy is “sliding into a recession”.
Forex Trading
The US dollar has been trading with mixed results in the currency markets: it fell slightly against the Euro, Japanese yen and Swiss franc, but up versus the British pound. USD/CHF fell to an intraday low of 1.0390, while EUR/USD remains under 1.5500. USD/JPY fell to a 3-week low around 102.60.
Published on
Fri, May 9 2008, 16:10 GMT
Archive
- Dollar Sentiment Not Too Affected By Today's Data
Published On Fri, May 16 2008, 09:48 GMT
- Former Fed's Volcker Says Dollar Decline Can't ‘Get Out Of Hand'
Published On Thu, May 15 2008, 10:03 GMT
- European Ministers Happy With Dollar's Rally Against Euro
Published On Wed, May 14 2008, 07:12 GMT
- Fed's Evans Says US Economy Should Improve Later This Year
Published On Mon, May 12 2008, 15:43 GMT
- US Trade Deficit Shrinks: Good Or Bad?
Published On Fri, May 9 2008, 16:09 GMT
[ View All ]
Grace Cheng Media Inc.
| 14 Wall Street, 20th Floor - New York NY 10005
http://www.gracecheng.com/ | gracecheng@gracecheng.com
Legal disclaimer and risk disclosure
Important Risk Disclaimer
Trading and/or investing of any security, product, asset or derivatives involves risk, and there is always the potential for loss. You understand that discussions of any product, asset or security published on the Site will not contain a list or description of relevant risk factors.
No content published on this Site constitutes a recommendation that any particular product, security, portfolio of securities, transaction or investment or trading strategy is suitable for any specific person. You understand that none of the bloggers, information providers or their affiliates are advising you personally concerning the nature, potential, value or suitability of any particular product, asset, security, portfolio of securities, transaction, investment or trading strategy or other matter.
As markets change continuously, previously published information and data may not be current and should not be relied upon. All content on the Site is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.
You understand and agree that, although we require all employees to disclose every stock in which they, their immediate family, or any entity under their control, have a personal interest, if such stock is mentioned in a blog, post, or content which they write, outside bloggers or other content contributors or their affiliates may write about securities in which they or their firms have a position, and that they may trade for their own account, and that they may or may not be subject to a disclosure policy.
No representation is being made that the PowerFX Course, and any associated advice or training, will guarantee profits, or not result in losses from trading. Your trading results may vary. Neither the products, any explanation or demonstration of their operation, nor any training held in conjunction therewith, including, without limitation, through online chat, in conjunction with any advertising and promotional campaigns, during in-person seminars or otherwise, should be construed as providing a trade recommendation or the giving of investment advice.
The Site is not intended to provide tax, legal, insurance or investment advice, and nothing on the Site should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product, asset or security by Grace Cheng Media Inc or Grace Cheng or any third party. You alone are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation.
Grace Cheng Media Inc and Grace Cheng assume no responsibility for anything posted on the forex forum. Authors of posts will be individually responsible. All external links and advertisements are for information purposes only and neither Grace Cheng Media Inc or Grace Cheng will assume any responsibility for their contents.
The TOU and the relationship between you and Grace Cheng Media Inc are governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflict of laws. You and Grace Cheng Media Inc agree to submit to the personal and exclusive jurisdiction of the federal and state courts located within New York County, New York, and waive any jurisdictional, venue, or inconvenient forum objections to such courts. If any provision of the TOU is found to be unlawful, void, or for any reason unenforceable, then that provision shall be deemed severable from the TOU and shall not affect the validity and enforceability of any remaining provisions. No waiver by either party of any breach or default hereunder shall be deemed to be a waiver of any preceding or subsequent breach or default.