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 stand-alone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad”, the LFB Trade Team said. “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.
TheLFB-Forex.com Trade Desk Thoughts: The U.S trade deficit declined to $27.6 billion in March, less than expected. During the months February to March, U.S. exports reached $123.6 billion, while imports declined to $151.2 billion. In March, exports were $3.0 billion less than in February, while imports declined by $1.6 billion from the previous months.
In March, the goods deficit increased $1.2 billion from February to $38.4 billion, and the services surplus decreased $0.2 billion to $10.8 billion. Exports of goods decreased $2.5 billion to $82.0 billion, and imports of goods decreased $1.3 billion to $120.3 billion. Exports of services decreased $0.5 billion to $41.7 billion, and imports of services decreased $0.3 billion to $30.9 billion.
In March, the goods and services deficit decreased $29.8 billion from March 2008. Exports were down $26.0 billion, or 17.4 percent, and imports were down $55.9 billion, or 27.0 percent.
“Even though a smaller trade deficit is positive for the U.S. economy, it denotes that the economy is slowing down. Until recently, the U.S. deficit was seen as a large macroeconomic imbalance. As such, the credit crisis may create the possibility for the U.S. economy to correct, to some extent, the trade deficit, as internal consumption slows.”
Forex Technical Reaction: The dollar strengthened in the broad market after the release. The biggest gains came against the pound and the euro. In the futures market, the S&P fell 1 point, bouncing from the 913.00 resistance area.