American focus: Trade Balance report supported USD [E]

The main Friday’s and whole week event became April Trade Balance data. Pessimistic forecasts limited dollar’s efforts to continue weekly growth in the first half of day. After 5 days of rising USD weakened ahead of Trade Balance. Analysts expected the widening of deficit to $65 bln. versus $62 bln. in March. However date was stronger then expected that inspired dollar’s bulls. According to statistic, trade deficit widened to $63.4 bln, higher as to previous figure, but below forecasts. Meanwhile, a widening deficit means more dollars need to be converted into foreign currency to pay for imports. The current account balance reached $800 bln in 2005 for the first time. For comparison, in Japan this figure was a record 2.39 billion yen ($20.9 bln.) in March.

Dollar can finish this week with biggest growth from August against euro, in spite of the ECB decision to increase base interest rate of the region to 2.75% on Tuesday. Strong economic data could not support the yen. Machinery orders rose 10.8% in April, exceeded forecasts. It means that optimism among manufacturers about perspectives of national economy grows. In March BOJ made the first step coming from “zero” interest rates. At the moment most of economists predict that the Central Bank for the first time since 2001 will lift the rates from current level at 0.1% in July. After April 21 the dollar fell 2.2% against the yen after the officials and bankers called the Asian countries to let their currencies to appreciate. Today 2-day's session of G-8 Ministers of Finance begins (St.-Petersburg, Russia) on which they will discuss world imbalances.

From the beginning of this week the dollar became stronger on a background of emerging markets fall as the Central Banks of many countries have raised interest rates. Besides representatives of the Federal Reserve (FED Atlanta Jack Guynn, Susan Bies, FED Saint Louis William Poole, FED Chairman Ben Bernanke), expressed their fears by inflation processes in the country that means continuation of rates increase in the USA.

The stock market opened on the optimistic note on Friday after strong forecast of Texas Instruments. However investor’s activity is limited because of trade balance report. Oil prices grew slightly. July futures on WTI rose $1.30 to $71.65 per barrel.