The US trade deficit is expected to come in about $28.5 bln when released in about 30 minutes. It is expected to rise a few billion from last month’s $25 bln reading. But let’s step back and take a look at the bigger picture.
A year ago, the trade deficit reached an astonishing $77 bln and was between $65 and $70 bln per month for three years. Cutting that monthly deficit in half or more cuts the amount of funding the US needs from abroad. With the US savings rate rising, the focus on foreign purchases of US debt may slightly misplaced. Sure they still need to buy a lot of US paper, but hey don’t need to buy all the additional debt. We’ll take care of that ourselves, thank you.
That’s a big macro plus for the dollar.