The U.S. trade deficit reduced to a five year low in February, largely due to the port labor dispute, which contributed to the weak results. In fact the weakest purchases from abroad since April 2011, according to the Commerce Department on Thursday. The measure in the difference in value between imports and exports, narrowed 16.9% to $35.4 billion. According to Thomas Costerg, an economist at Standard Chartered Bank in New York; “The surprise is mostly due to the West Coast ports disruptions, and it’s temporary. Looking ahead, the trade deficit should widen again.” US unemployment claims reduced further, as 268k individuals filled for jobless claims, dropping by 20,000 in a week. This puts the weekly unemployment claims at the second-lowest point since April 2000. This indicates that employers remain positive about the economy’s prospects after a recent slowdown in sales with Unemployment claims at 15 year low. Stocks tuned bullish after a two-day fall before the jobs data. The S&P 500 Index rose 0.4% at the close in New York.
According to Canada’s Trade balance report, the country’s imports declined 0.7% in February while exports were up 0.4%, putting the trade balance at a $1 billion deficit. January’s results was revised to $1.5 billion deficit as estimates of energy products exports and special transactions trade imports were replaced with administrative and survey data as they became available.
Australia’s trade balance remained in the negative with a deficit of $1.26 billion in February, a slight increase compared to a deficit in January of $1.0 billion. The AUD has hit a three week low following the release as a weaker trade balance adds to the impact of growing expectations of a likely RBA rate cut next Tuesday, as well as iron ore prices dropping to fresh record lows overnight.
Today, most banks are on holiday, therefore volatility may be low, with only a few fundamental reports from the US scheduled on the calendar:
Yesterday, the unemployment claims report showed very positive results as jobless claims dropped to its lowest in about fifteen years. Further confirmation of this strength is expected to be evident in the Non-Farm Employment Change result today which is eestimated to show 251k people added jobs. Still a positive reading and the Unemployment Rate is forecast to remain at 5.5%. The labor market obviously is at a strong point, which is one of the criteria for the Feds to begin raising rates. At this point, the markets may begin to weigh in on the USD in anticipation of the rate hikes expected to come soon.