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U.S. current account deficit narrows greatly in Q2 on smaller goods trade deficit

In the second quarter, U.S. current account deficit narrowed greatly, owing to a smaller goods trade deficit. In the June quarter, the current account deficit narrowed by USD 20.3 billion, mainly due to a decrease in goods deficit that added up to USD 17.6 billion in the quarter. This might reflect exporters rushing products out the door before retaliatory tariffs bite, noted Wells Fargo in a research report.

The U.S. current account deficit is still being financed by foreigners, but possibly less enthusiastically than in the past. The USD 24.6 billion of foreign money that flowed into U.S. Treasuries marked the second smallest quarter since a net outflow occurred for a single quarter in 2014. U.S. corporate bonds continue to benefit from ample foreign inflows.

“Our forecast for a widening in the trade deficit implies this Q2 narrowing in the current account will only be temporary”, added Wells Fargo.

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -12.1841. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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