The deficit narrowed to $174 bln versus estimates for $178 bln. As a percentage of GDP, a more important measure than the outright dollar amount, the deficit was trimmed to 4.8% of GDP from 5.1% in Q2.
The narrower deficit is a mixed bag. it implies US borrowings from abroad will decline marginally but it also implies a weak economy. About the only way the Us closes international imbalances is by consuming less from abroad, history has shown.
EUR/US trades at 1.4100, in the middle of a 1.40/1.42 range, consolidating its explosive gains of recent sessions and adjusting to the new paradigm of the Fed influencing interest rates via buying bonds rather than adjusting short-term reserves.