Trade Balance and its importance

US trade deficit narrowed -7.6% to -$47.2 bln in October after shrinking -4.6% to -$51.1 bln in September (revised from -$52.45 bln). Exports declined 0.2% after September’s -0.9% slide, and imports dropped -1.7% versus -1.6% previously (revised from -1.7%). The “real” deficit was -$79.1 bln versus -$83.0 bln (revised from -$82.6 bln) as exports fell -0.5% and imports were down -2.0% after prior respective declines of -1.2% (revised from -1.0%) and -1.9% (revised from -2.0%). The trade balance with China was -$31.3 bln versus -$31.6 bln and was -$3.4 bln with Canada versus -$2.6 bln (revised from -$2.5 bln). Mexico’s balance was -$8.8 bln in October versus -$8.9 bln. The larger than expected narrowing in the deficit could boost Q4 GDP estimates.

The Dollar edged higher following the data, where jobless claims were lower than expected, and the trade deficit was narrower than consensus forecasts. USDJPY moved up from near 108.80 to over 108.90, as EURUSD dipped a few points, under 1.1090. Equity futures continue to indicate a higher Wall Street open, as focus remains on hopes for a trade deal.