The U.S. trade deficit widened to -$60.9 billion from -56.4 billion in March, as rising oil costs boosted the value of petroleum imports. The deficit ex-petroleum increased slightly to 26.4 billion from 26.2 billion the month prior. The gap widening 7.8% masked the biggest gained in exports in four years. A weak dollar led to the demand for U.S. goods increasing by $5 billion to $155 billion. Emerging markets China and Brazil, who are awash with dollars, saw their consumption increase 21.7% and 27.2% respectively. The record setting pace of oil prices should continue to increase the value of petroleum exports and led to the trade gap widening. The recent bullish talk from Chairman Bernanke will not be enough to provide the amount of support the greenback will need to offset the price appreciation. Therefore, expectations have increased that the MPC will look to raise rates at their next policy meeting with the possibility of intervention as the central bank looks to rein in inflation. – John Rivera, Currency Analyst
