USD softens on trade deficit announcement

The USD has softened once again following its trade deficit being announced even wider than expected. As a result, I am now expecting possible revisions to GDP forecasts in the near future. Prior to the release, the USD was beginning to pick up some momentum, but all gains have been erased as a result of the trade balance data. With the trade deficit putting the US on the back foot and the US fracking sector (oil) struggling, it is likely we will see markets panic if the deficit remains this high in the coming months. Many might even call for a continuation of low interest rates to support capital expenditure and job creation.

The Canadian Trade Balance was also a surprise, with its deficit swelling to a record 3.02B (CAD) as the economy continues to wobble. In the wake of falling oil prices, currency investment in the oil industry has been cut significantly. Although the price of oil has managed to bounce somewhat higher, it is likely we will continue to see the impact over the next few months as investment and job creation both suffer with such depressed prices. With Canada also reliant on the US economy for exports and the US also encountering a slowdown, we could in turn see further economic woes for Canada.