USD soft­ens on trade deficit an­nounce­ment

Financial Mirror (Cyprus) - - FRONT PAGE -

The USD has soft­ened once again fol­low­ing Tues­day’s trade deficit be­ing an­nounced even wider than ex­pected. As a re­sult, pos­si­ble re­vi­sions are ex­pected to GDP fore­casts in the near fu­ture. Prior to the re­lease, the USD was be­gin­ning to pick up 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.

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