The August Trade Deficit unexpectedly narrowed to $30.7b and was $2.3b less than forecasted and down from $31.9b in July. The composition of the reduction in the deficit was good in that exports rose and imports fell. But, imports fell because of a reduction in the amount of crude imported. Imports ex this would have been up as would the overall trade deficit. Exports rose for a 4th straight month to the highest since Dec ’08 and are also of course a key component in determining the pace of US economic growth in terms of helping to soften (can’t completely offset) the impact of reduced US consumer spending. We need to make more of the stuff the rest of the world wants, whatever that might be.
Following yesterday’s much better than expected jobs report in Australia, the other large natural resource country, Canada, did the same. Sept job growth totaled 30.6k, above expectations of +5k and their unemployment rate unexpectedly fell a sharp .3% to 8.4% and the Canadian $ is rising to a fresh one year in response. Overnight, the US$ bounced after Bernanke said “at some point” as the “economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.” But, don’t think Ben is ready to turn in his B52 for a helicopter just yet as he said just prior that the Fed’s accommodative policies will likely be warranted for an extended period.” It’s not just a matter of when they raise but also at what pace. Better than expected IP #’s from France and Italy tempered the Euro drop. Chinese stocks exploded higher by 5% as they’re back from holiday.
