Forex Blog: Currency Trading News & Analysis.

May 11th 2005

US trade imbalance improves

The April US trade deficit was $55 Billion, down from the record of $60 Billion set in March. The always controversial trade imbalance with China also declined. This is especially impressive, in light of soaring oil-prices and oil related imports. Always the voice of reason, economists have urged investors to proceed with caution. Monthly figures are notoriously volatile, they argue. April may represent an anomaly. If, however, the monthly figures are reflective of a general decline in imports, it will have serious implications for economic growth forecasts. In fact, many economists are already revising their estimates upwards, to levels exceeding 4%. In any event, the Federal Reserve will probably continue to raise interest rates, more certain than ever that the economy is healthy and expanding. The Financial Times reports:

Alan Greenspan, Fed chairman’s favored risk management approach suggests that at the moment the priority is too continue raising rates, to avoid a rise in inflation expectations, at a time when the Fed is more confident on the outlook for robust growth and has stressed uncertainty in the inflation front.

Read More: US trade gap narrows unexpectedly to $55bn

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Posted by Adam Kritzer | in Economic Indicators, US Dollar | No Comments »

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