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U.S. March Trade Deficit Widens As Imports Soar to Record High

U.S. March Trade Deficit Widens As Imports Soar to Record High

Tzu-Wen Chen, Technical Strategist

THE TAKEAWAY: [U.S. trade deficit widens more than forecast in March] > [Imports soar on higher oil prices and stronger U.S. demand] > [USDJPY gains]

The U.S. Department of Commerce issued a report this morning revealing that the U.S. trade deficit widened by more than forecast in March, reversing the narrowing of the trade balance in February. The trade deficit rose by 14.1 percent to $51.8 billion in March, as imports climbed to its highest level on record. The consensus projection of economists surveyed by Bloomberg News had called for a widening in the trade deficit to $50.0 billion. February’s balance was revised downwards to a deficit of $45.4 billion from $46.0 billion initially reported.

Imports rose by $238.6 billion (5.2 percent) in March, while exports climbed by $186.8 billion (2.9 percent). The surge in the value of imports reflected higher fuel prices, while U.S. demand for crude oil, computers, automobiles and televisions further boosted imports. The closely watched trade deficit with China expanded to $31.5 billion in March from $28.1 billion.

USDJPY 1-minute Chart: May 10, 2012

U.S._March_Trade_Deficit_Widens_As_Imports_Soar_to_Record_High_body_Picture_1.png, U.S. March Trade Deficit Widens As Imports Soar to Record High

Chart created using Strategy Trader – Prepared by Tzu-Wen Chen

Following the data release, the markets saw a mixed reaction for the greenback against its major currency peers. The U.S. dollar strengthened against the Japanese year, and at the time of this report, was trading 21 pips higher at 79.88 yen to the dollar.

--- Written by Tzu-Wen Chen, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.