What do the trade balance figures mean?
The trade balance figures measure the difference between imports and exports of a country, the trade balance can give an insight into an economies growth which can impact the currency of the country. When there are more exports then imports it is known as a trade surplus and when there are more imports its is known as being in a trade deficit. The trade balance is an important indicator of the economies growth because when in a trade surplus, a countries goods are in demand which also means the currency is in demand, this also means businesses can continue to expand due to demand for goods further increasing economic growth. The report is released once a month and is displayed in monetary value.
How to trade the trade balance figure
The trade balance figures are a great indicator of an economies growth and can have a direct impact on the countries currency so it is important to keep an eye on and also can create some good trading opportunities. When the trade balance figures are better then expected this will increase the currency’s value due to the increase in demand for the currencies goods and growing economy which could potentially lead to interest rate hikes. The opposite is true when the trade balance figures are worse then expected because this indicates slow growth and less demand for goods which could lead to interest rate cuts.