Trade balance represents the difference between imported and exported goods and services in a specified period of time, in this case, on a monthly basis. If exports are higher than imports, it is saying that we’re having a trade excedent. If imports are bigger than exports, we’re having a trade deficit.
Trade deficit is extremely important as big investment houses look at this indicator in order to revise their GDP projections for the whole economy. Traders also look at this economic release as export demands and currency demands are linked because foreigners need to buy domestic currency in order to pay for the exports of that respective country.
The standard interpretation for the trade balance is directly linked to the excedent or deficit side of it. Better than expected release should be viewed as positive for the currency, or at least for the risk on environment as of late years.
The most important things to take into consideration regarding Trade balance are:
- release date: on a monthly basis, around 35 days after month ends;
- release time: 12:30 GMT, during North American session;
- first tear economic release;