FX Closing Comments

FX trading was restrained today, although the Dollar was able to maintain its strong weekly gains. The main data release was the April trade deficit, which was higher than the previous month at $63.4b, though it was less expected. The 2nd half of the equation, next weeks's TIC data, will determine whether overseas capital flows were enough to cover the shortfall. The other key numbers for next week are the core CPI and PPI, which should confirm the market's view that rates are going higher in June. The figures will also set the stage for the handicapping of August's rate decision.