THE TAKEAWAY:U.S. March Budget Deficit Narrowed to $198.158 billion > Monthly Receipts Rose More than Outlays Increased> USD Pares Gain
U.S. budget deficit contracted less than expected in March after climbing to the highest monthly level in history in February. The monthly budget statement issued today showed that the imbalance declined to $198.158 billion last month from a record high of $231.683 billion in the previous month. Meanwhile, economists polled by Bloomberg News survey called for a shortfall of $196.0 billion.
The gap between spending and revenue narrowed in March as receipts increased at faster pace than outlays did in the month. March receipts surged to $171.215 billion from $103.413 billion in February while outlays rose to $369.373 from $335.096.
March’s budget shortfall brought the imbalance through the first half of the budget year to $778.988 billion. The U.S. federal deficit is on track to surpass $1 trillion for the fourth straight year. The government last reported budget surplus in September 2008. The Congress and the White House have struggled to come into agreement on tax changes and spending programs to address the country’s budget problems. In February, President Obama released his fiscal 2013 budget that called for $4 trillion in deficit reduction over the next decade through a combination of spending cuts and taxes hikes on the wealthy. However, Republicans have rejected the tax rises and favored deeper cut in government programs. Inevitably, curbing budget deficit will be the central issue of this year’s presidential election.
AUDUSD 1-minute Chart: April11, 2012
Chart created using Strategy Trader – Prepared by Trang Nguyen
Minutes following the monthly budget statement release, the reserve currency pares loss against most of its major trading partners. As can be seen from the one-minute AUDUSD chart above, the currency pair falls 15 pips from 1.0310 to 1.0295. At the time this report was written, the aussie trades at $1.0299.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
To contact Trang, email email@example.com