Forex Blog: Currency Trading News & Analysis.

October 13th 2005

Trade data paints mixed picture of US economy

Investors seeking to clarify the Fed’s monetary policy intentions took mixed comfort in the release of August’s trade numbers. On one hand, the American trade deficit was significant, which detracts from domestic growth and could conceivably lead the Fed to hold interest rates in order to facilitate continued domestic economic growth. On the other hand, the aggregate value of imports increased at the fastest rate in over a decade, which suggests inflation will continue to be a problem. While some disagreement persists, economists believe the fed will reconcile this discrepancy by prioritizing its concerns over inflation, and it will continue to raise interest rates as planned. The Financial Times reports:

Foreign Exchange Analytics said “Oil prices are not going lower in the short-term and second round inflationary effects are guaranteed, leaving the Fed with some heavy lifting on interest rates – straight from neutral to restrictive.”

Read More: Dollar rallies after trade data

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

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