The US Dollar closed lower on Friday as data released showed that the United States’ trade deficit soared to its highest level in 12 years and U.S. employment growth rebounded less than expected in January. To compound matters further, job losses in December were worse than initially thought.
The Bureau of Labor Statistics reported on Friday that the U.S. economy added just 49,000 jobs last month. Although this is in line with market expectations, it is well short of the 174,000 reported by private payrolls processor ADP on Wednesday.
To add further salt on the wound in the economic news, the Bureau of Labor Statistics also revised December’s figures to show a net loss of 227,000 jobs as apposed to the 140,000 originally reported.
The bulk of the job losses came in the retail and entertainment sectors. General merchandise stores saw 30,000 jobs lost, electronics and appliance stores lost 29,000 jobs, and amusement parks and casinos saw 27,000 jobs gone as the COVID-19 runs unchecked in the world’s largest economy.
US Trade Deficit Worsens
The US Commerce Department reported on Friday that 2020 saw the US register its highest ever trade deficit.
The trade deficit surged 17.7% to $678.7 billion in 2020, the highest since 2008. Exports of goods and services plummeted 15.7% to their lowest level since 2010. Imports of goods and services slumped 9.5% to a four-year low.
Overall, the US economy shrank 3.5% last year, the biggest decline in gross domestic product since 1946. However, trade flows have been steadily increasing and in December, the trade deficit narrowed 3.5% to $66.6 billion .
The figures were a disappointment after economists had forecast the trade deficit to contract to $65.7 billion in December.
Imports of goods increased 1.5% to $217.7 billion in December. Exports surged up 4.7% to $133.5 billion.
Weak Data Sends Dollar Lower
Friday’s weak jobs and trade data sent the US Dollar lower in the forex markets. The US Dollar index closed down 0.64%. Meanwhile, the USD closed 0.63% down against the EUR, down 0.12% against the JPY and down 0.47% against the GBP.
Against the commodity-linked currencies, the USD fared worse. The greenback closed down 0.57% against its Canadian counterpart and down 1.04% against the Australian Dollar.
