Lower inflation was worth about 16 pips to the USD/JPY and a tad more to EUR/USD but that might not be the end of the story. Not even a fall in the current account deficit could save the buck and we could see some shifting of expectation before the FOMC tonight.
On the plus side the increases show that trade is growing. The one caveat to the deficit numbers is that there was “comprehensive restructuring ” of the economic accounts that came into effect in June this year. I’m not sure how much that may have skewed this data. Also the deficit on goods and services rose to $130.3bn from $124.5bn.
So a mixed bag of data but the eyes will be on whether it changes the market’s mind before tonight.
