Reported US Trade Deficit Widens

The US trade deficit for December 2011 (reported by the US Commerce Department) widened by almost 50 billion USD, the most month over month increase since last June. The recent relative weakness of the dollar, coupled with the improving US economy, increased the demand for imports.

More than half of the 2011 deficit came from trade with China. This report comes right before a US visit by Chinese heir apparent Xi Jinping. This data could increase US industry opposition to trade with China and create pressure for legislation. Both nations have been engaged in trade actions such as punitive duties since 2009, and the political seasons in both the US and China are likely to encourage further calls for such action.

Source: AFP

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.