The US Dollar was mixed against most major currency pairs in Tuesday’s trading as the US Deficit soared to a 14 year high in August.
The US Commerce Department reported on Tuesday that the US trade deficit surged 5.9% to $67.1 billion.
August’s deficit is the widest since August 2006. It also surpassed analyst’s expectations for a gap increase to $66.1 billion for August.
Worryingly for the world’s largest economy, imports rose again, signalling trade concerns for the third quarter. Imports rose by 3.2% to $239 billion. Goods imports increased from $6.5 billion to $203 billion. Meanwhile and encouragingly, exports increased 2.2% to $171.9 billion. Goods exports jumped $3.5 billion to $119.1 billion.
Interestingly, the trade deficit with China, the world’s second largest economy and subject of an ongoing trade war with the US for much of 2019 and early 2020, fell $1.9 billion to $26.4 billion for the month of August.
US Dollar Mixed
The USD found itself mixed in Tuesday’s trading. on the 14-year high deficit news. Against the British Pound, the US Dollar is down 0.55% at the time of writing. Elsewhere, the USD is up 0.30% against the EUR, down 0.14% against the Japanese Yen and 0.91% down against the Australian Dollar.
The US Dollar Index which measures the USD against a basket of weighted currencies is up 0.29%, valued at $93.810
Federal Reserve chairman Jerome Powell Talks Up Stimulus
Helping to keep the greenback flat was as Federal Reserve chairman Jerome Powell reiterating the Fed was in no rush to stop propping up the US economy. He also warned that a slower recovery would keep interest rates lower for longer. Powell said:
“If recovery is slower, rates will be at lower bound for longer; guidance is outcome-based, not time-based,”
“Too little support would lead to a weak recovery … Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth,”
