Forex Blog: Currency Trading News & Analysis.

November 12th 2005

US trade deficit sets record

In September, the US recorded its worst trade deficit ever, of $66 Billion. The chief causes of the aberrantly large trade deficit were hurricane Katrina, high oil prices, and a strike at Boeing. The closing of ports that occurred during Katrina as well as the strike at Boeing, which combined to reduce net exports by $4 Billion, would seem to be isolated incidents and will not likely impact the balance of trade in the future. Soaring oil prices, on the other hand, may remain high for quite some time, and represent a structural, more pronounced change in the balance of trade. Until members of OPEC decide that they would prefer to hold Euros over USD, however, the Dollar should be safe.

“The trend over time is likely to remain for a wider trade gap generally,” said Ian Morris, US economist at HSBC in New York. HSBC said that the worse-than-expected trade deficit may drag growth in the third quarter down from about 3.8 to 3.4 per cent.

Read More: Hurricanes and oil push US deficit to $66bn

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

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