Tradе Balance

Trade Balance is one of the key indicators. It is the value of the goods and services sold to other countries and bought from them, it forms part of the balance of payment (Current Account). Balance is a correlation between the sum of money gained by the USA economy by exporting goods and services to other countries and the cost of goods and services imported to the country, that is the difference between export and import. At first export is analyzed as it has direct impact on the economic acceleration. Whereas import reflects demands for goods within the country (import increase reflects stocks forming that may signify further possible slow increase in selling). Rate of exchange affects trade balance as it corrects the nominal value of the imported goods and services. In case the sum of exported goods and services exceeds the price of imported ones Trade Balance is positive (surplus), in case import surpasses export it is negative (deficit).

Surplus (or decrease of deficit) is favourable for the national currency rate of exchange advance. In recent years the USA trade balance is negative, that is why it is indicated as Trade Deficit.

Market reaction depends on the data importance. It should be noted that trade balance volatility may be significant for GDP forecasts, as import volume is subtracted from GDP whereas export volume is added to it. In case the USA Trade Balance decreases on export expanding, demand for the national currency increases.

Source: The Census Bureau and the Bureau of Economic Analysis of the Department of Commerce.

Frequency: Released monthly (usually on Tuesday, Thursday) at 16:30 (GMT +3).

Market importance: High

Analysis: On the whole, Trade Deficit growth is quite steady. After a new historical high the indicator is recovering, the deficit has shown the lowest levels within the last year.

Conclusion:
1. In the short-term plan trade deficit is expected to steady. In December oil prices steadied, which had a positive impact on the foreign trade. In November trade deficit with the countries of Asia decreased insignificantly, general upward tendency is valid. Low currency rates of the Asian currencies will have a negative impact on the foreign trade in the mid-term perspective. Trade deficit decrease in November was mainly triggered by oil purchasing price fall, trade deficit decreased by $7 billion from August 2006 till November 2006 on this fact.
2. Indicator forecasts in November are adequate to the situation, the deficit growth may exceed our expectations.