The Commerce Department is due to release data on US international trade on Nov. 10. Economists in a Reuters survey forecast a median $61.0 billion deficit in September compared with a $59.03 billion deficit in August.
The wide US trade gap has been weighing on the dollar for much of the past four years and so the report will be closely watched by currency investors.
Although the dollar has received a boost in 2005 from rising US interest rates and yields that have burnished the appeal of dollar deposits, currency analysts warn that the wide US trade gap could push the dollar lower over the long term. A widening trade gap increases US reliance on portfolio inflows to offset the deficit.
If Americans continue to buy foreign goods faster than US businesses can sell their goods and services overseas, the outflow of dollars will remain heavy, putting pressure on the currency.
UBS:
Forecast: $62.0 billion
"The deficit probably rose to a new record high in September, with a strike-related decline in aircraft exports and a price-related rise in energy imports more than offsetting the delays in exports and especially imports caused by port shutdowns after Hurricane Katrina. (The hurricane likely depressed imports more than exports, since more imports than exports typically go through the customs districts most affected by the hurricane.)
"We expect (the trade deficit) to be lower than assumed in the advance estimate of third quarter gross domestic product - potentially adding 0.2 point to the originally reported 3.8% growth rate. Already reported construction data were also stronger than assumed - by enough to add 0.2 point to growth."
CITIGROUP:
Forecast: $65.5 billion:
"Opposing and unfavorable movements in merchandise exports and imports probably left the combined deficit on international trade in goods and services at a new all-time high in September, eclipsing by a wide margin the prior record of $60.4 billion posted last February. A strike-related dive in commercial jetliner deliveries to foreign carriers, combined with a projected pullback in other overseas goods shipments, likely trimmed merchandise exports by 4.2% to a six-month low of $73.5 billion. On the other side of the ledger, merchandise imports probably climbed by 2.5% to a new peak of $144.1 billion in September."
BNP PARIBAS:
Forecast: $56.0 billion
"The US trade deficit remains shy of the record $60.4 billion shortfall registered in February."
"(Hurricane) Katrina distortions are expected to reduce the deficit temporarily in September."
"The domestic inventory cycle has almost certainly flattered the data by crimping import volumes."
"Trade trends in the coming months are likely to be the mirror image of the last five months. Lower crude prices should ensure that the petroleum deficit stabilises and even improves, but the non-petroleum deficit should resume its secular downtrend."
BARRINGTON RESEARCH:
Forecast: $60.50 billion or more
"The big driver for the deficit will be the surge in energy prices, which took import prices in September to a 15-year high. The Boeing strike has had a significant negative effect on exports. The Gulf Storms obviously had an effect on international trade though the impact on exports and imports may have cancelled each other out." (Reuters)
