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US Dollar Trims Gains After Budget Deficit Widens to $60 Billion in June

US Dollar Trims Gains After Budget Deficit Widens to $60 Billion in June

Tzu-Wen Chen, Technical Strategist

THE TAKEAWAY: [U.S. budget deficit widens in June] > [On track to hit federal debt limit before end of year] > [USDCAD trims earlier gains]

The U.S. government’s monthly budget deficit widened in June from a year earlier, reflecting an increase in spending. According to the Treasury Department’s monthly budget statement released today, the shortfall widened by 38.7 percent to $59.7 billion in June from $43.1 billion a year earlier, pushing the deficit to $904 billion for the first nine months of fiscal 2012. Economists surveyed by Bloomberg News had expected the budget deficit to widen to $60.0 billion in June. The Treasury Department noted that the U.S. budget deficit is on track to hit the federal debt limit before the end of the year.

The gap between spending and revenue widened in June as outlays increased at a faster pace than receipts. June outlays surged to $319.9 billion from $305.3 billion in the previous month, while receipts rose to $260.2 billion from $180.7 billion. The U.S. budget deficit is on track to exceed $1 trillion for the fourth straight year.

USDCAD 1-minute Chart: July 12, 2012

US_Dollar_Trims_Gains_After_Budget_Deficit_Widens_to_60_Billion_in_June__body_Picture_1.png, US Dollar Trims Gains After Budget Deficit Widens to $60 Billion in June

Chart created using Market Scope – Prepared by Tzu-Wen Chen

In the minutes after the monthly budget statement was released, the U.S. dollar fell against the Canadian dollar, trimming earlier gains. At the time of this report, the USDCAD pair was trading lower than pre-data levels at C$1.0189.

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

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