The trade balance is an indicator of the ratio of exports and imports of goods, one of the components of the country's balance of payments. In order to fully analyze the economy, investments of non-residents and residents are added and subtracted from the commodity exchange, the current balance of payments is found and its share (as a percentage) to the GDP is calculated.

Stock Market Investors and Traders Forex neglects the investment component, since the main volume falls on the trade balance. The balance obtained from the subtraction of foreign trade accounts, which take into account the value of goods moved outside the borders and the amounts of imports delivered, is taken into account.

The positive balance indicates the demand for goods of companies produced by the state or various dumping and hidden protectionist measures. Negative values can lead to the displacement of imported goods of the national industry.

In developed countries, the state has to lend to high consumption through the issue of debt instruments, which in turn contributes to low inflation. Foreign investment flows into knowledge-intensive and high-tech industries, which allow the economy to "balance" due to high labor productivity, allow avoiding the consequences of the debt crisis. At the same time, there is a quasi-deficit, since part of the national business has been moved to importing countries to reduce the cost of production.

High consumption and a balance deficit in countries with undeveloped economies clearly lead to an economic crisis, as can be seen in the example of Greece, Italy, Spain and a number of Eastern European countries. The countries are members of the European Union and this threatens the integrity of the entire economic bloc.

Format and time of publication of the trade balance

The trade balance is published in the middle of the month and is shown as a negative or positive value, expressed in US dollars or the national currency. Before the publication is published in the economic calendar traders have access to the previous and forecast values of analysts.

The impact of the trade balance deficit(surplus) on the Forex market

The trade balance deficit leads to the devaluation of the national currency and, as a result, its weakening in the Forex market. Traders track the relative value, the dynamics of changes in percentages relative to the previous year, quarter and month. Reducing the deficit may cause the strengthening of the national currency.

The growth of this parameter can force The central bank will devalue the national currency, the effect of which will appear on Forex gradually, within six months.

A trade surplus requires establishing the reasons for its occurrence, but in any case, a side effect of its increase will be an acceleration of inflation and the influx of a large number of foreign investments, which can cause excessive strengthening of the national currency or, conversely, devaluation against the background of rising prices.

An instant deterioration of this indicator is possible through the mechanism of revaluation, which will lead to a sharp weakening of the national currency. But sometimes the Central Bank goes to postpone the negative impact of the processes generated by the dynamics of trade export-import imbalances, resorting to currency interventions, buying or selling large volumes on the Forex market. This forces traders to follow the given trends.

The US trade deficit affects every currency Forex is due to the size of the country's economy and the fact that the dollar is the yardstick for all pairs under the Jamaican Agreement of the Big Seven, and also occupies the main share of international mutual settlements.

The growth of this parameter leads to the devaluation of state gold and foreign exchange assets around the world, forcing the Central Banks of developed countries to " take over the work Fed", making currency interventions.

Since 2008, after a large-scale economic crisis, the budget deficit began to shrink and the strengthening of the US dollar made many analysts "expect" to achieve parity in the main pair EUR/USD.

In 2018, President Donald Trump attempted to reduce this parameter by measures of protectionism in the national economy and unleashing a "trade war" to obtain concessions that help improve the balance of payments by increasing exports.

The main "enemies" of the United States are the European Union and China, countries with a high positive balance. In the economic association, Germany has the highest indicator, followed by the Netherlands, Denmark, Sweden and Switzerland.