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Trade Balance Deficit Shrinks, Budget Deficit Grows, Dollar Strengthens

February 11, 2009 (Last updated on September 17, 2010) by

EUR/USD fell today despite the not-so-good fundamental reports from the U.S. that were released today. The trade balance deficit wasn’t as good as the traders have expected, while the Treasury budget deficit grew significantly. And only oil reserves growth was a really positive signal for the dollar bulls. EUR/USD is now trading near 1.2881.

U.S. trade balance deficit was at $39.9 billion in December — down from $41.6 billion in November but below the quite optimistic estimate of $35.5 billion.

Crude oil inventories continued their gaining spree and increased by 4.7 billion barrels last week.

Treasury budget deficit in January was at $83.8 billion — up from $17.8 billion surplus in January of 2008. The forecast deficit for the previous month was at $78 billion.

2 Responses to “Trade Balance Deficit Shrinks, Budget Deficit Grows, Dollar Strengthens”

  1. Jim Mach

    I thought trade deficits mattered in the wrong way until I read an article by Kevin Price of the Price of Business Show. He noted that a trade deficit may be a sign of strength at


    Andrei Reply:

    This articles makes wrong conclusion from the right facts. When the country imports more than it exports it’s increasing its private and public debt – thus “bubbling” the consumer-orientated economy. If the GDP grows at a reasonable ratio to the gains in debt than the trade deficit doesn’t really matter much. A growing or falling trade deficit isn’t someone’s success or failure its just some measure of the currency and debt flows.


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