U.S. trade deficit widens in June

The U.S. trade deficit widened to $44.5 billion in June from an upwardly revised $40.9 billion in May. Nominal exports rose by 0.3% m/m, with both goods and services recording gains on the month. Imports were up a stronger 1.9% m/m, entirely due to strong gain in the goods segment.

Net-trade will be a small net drag on second quarter growth while a continued drag from net-trade will likely continue through the rest of this year. Recent global events have pushed safe haven flows back to the U.S., sending government bond yields lower and the dollar higher. With global demand already on a soft footing, and foreign business sentiment adversely affected by the Brexit issue, increased price pressures from a higher dollar will continue to adversely affect exports.

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