US Current Account Widens in Q1

The U.S. current account deficit widened in the first quarter to its highest level since 2012 likely due to the strong dollar’s drag on overseas profits and exports.

The Commerce Department said on Thursday the current account deficit, which measures the flow of goods, services and investments into and out of the country, increased 9.9 percent to $113.3 billion. That was the largest shortfall since the second quarter of 2012.

Economists polled by Reuters had forecast the deficit rising to $117.0 billion. The government revised data going back to the first quarter of 1999.

The first-quarter current account deficit represented 2.6 percent of gross domestic product, the highest since the third quarter of 2012, from 2.3 percent in the fourth quarter.

Still, the deficit remained well below a record high of 6.3 percent touched in the fourth quarter of 2005 as strong domestic energy production keeps the import bill in check.

The robust dollar has hurt the profits of multinational corporations and is also constraining export growth. The dollar gained about 4.5 percent against the currencies of the United States’ main trading partners in the first quarter.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza