Release Explanation: A country's exports minus its imports; the largest component of a country's balance of payments. An increase or decrease in the Trade Balance will help determine the future economic outlook and growth numbers in a region. It can impact all aspects of an economy as it is the way that region balances its books.

This is a standalone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad. A currency will be greatly impacted by this report as the costs of buying Imports, or selling Exports, is reliant upon a currency's valuation to a degree. A country that Exports more than it Imports (China for example) will benefit from a weaker currency; its Exports are cheaper for foreigners to buy, and vice verse.

Trade Desk Thoughts: The U.S. trade deficit contracted by the most in 12 years during November, as the fall in crude prices along with a worsening recession constrained demand for a range of foreign products. The trade deficit declined by 28.7% to $40.44 billion from October's downwardly revised $56.69 billion, the Commerce Department said today. Originally, the October deficit was estimated at $57.19 billion.

The $40.44 billion gap was the smallest since $40.0 billion in November 2003. The 28.7% drop was the largest since 34.9% in October 1996.

The numbers are a clear reflection the economy is slowing rapidly, said Matthew Carniol, chief currency strategist at One needs look no further than the demand for oil in order to appreciate just how severe the contraction is.

In volume terms, the amount of oil imported declined 19.3% to 261.60 million barrels in November from 324.19 million in October.

The U.S. deficit with China shrank to its lowest in five months, to $23.06 billion from $27.96 billion during October. The June 2008 deficit was $21.4 billion.

Imports of capital goods such as computers and engines tumbled $2.21 billion. Auto and related parts imports dropped $1.18 billion. Purchases of foreign-made consumer goods, like televisions and diamonds and toys, plunged by $3.79 billion.

The deficit with Japan dropped 17.8% to $4.97 billion from $6.05 billion. The trade gap with the euro area declined 42.9% to $4.40 billion from $7.71 billion. The deficit with Canada fell 43% to $3.34 billion from $5.86 billion. The U.S. gap with Mexico fell 26.6% to $3.52 billion from $4.80 billion.

Forex Technical Reaction: The dollar has been gaining broadly overnight as S&P futures declined, with the greenback recently at or near session highs against the euro, pound and Australian dollar.