Deficit not good, but dollar holds steady
April 12, 2005
The news was not good, but not nearly as bad as expected either on Tuesday when February’s U.S. trade deficit numbers was released.
The trade deficit was $61 billion in February, an all-time high. This was up from $58.3 billion in January, which had also been a record. The increase was laid mostly to increases in crude oil prices.
Some analysts, in explaining the trade data’s small effect on the dollar, said that in order for such news to weaken the dollar substantially over a long period, such news must be a great deal worse than expected.
And, in fact, after an initial fall when the data was released, the dollar sat about the same against the euro at $1.296 in early trading.
Still unknown is what the effect on the dollar will be when the most recent Federal Open Market Committee minutes are released and investors find out what the minutes have to say concerning interest rates.
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