Forex News: US October Budget Deficit Widens More than Expected
THE TAKEAWAY: [US October budget deficit widens to $120.0B, more than expected] > [Monthly outlays outpaced receipts] > [USDJPY strengthens]
The U.S government’s budget expanded in October, the first month of the new fiscal year, after a surplus of $75.02 billion in September. According to the Treasury department, the deficit widened by 22% to $120 billion from a shortfall in October 2011. Meanwhile, economists surveyed by Bloomberg had a median estimation of $113 billion.
The gap between spending and revenue broadened as the increase in outlays was considerably larger than the gain in receipts. From a year earlier, total outlays grew 16.4% to $304.31 billion, while receipts expanded 13.0% to $184.32 billion.
Lower corporate tax receipts also contributed to the expanded deficit in October. In order to lower future gaps and avoid the fiscal cliff, President Obama and Congress seek an agreement to cut spending and increase tax. USDJPYS 1-minute Chart: November 13, 2012 Chart created using Market Scope
In the minute after the monthly budget statement was released, the U.S. dollar pares loss against the Japanese yen. As can be seen from one-minute USDJPY chart above, the USDJPY rose to 79.389 from 79.382, but quickly saw correction to the same level before report. At the time this report was written, the USDJPY pair was trading higher at 79.391.
--- Written by Renee Mu DailyFX Research
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