The Event:
At 8:30 AM EST on Tuesday, April 13th, the Bureau of Economic Analysis (BEA) releases the U.S. Trade Balance Report. The released figure is read in billions and is considered one of the most significant U.S. dollar based releases.
Description:
The U.S. Trade Balance release also called International Trade is the difference between exports of goods and services and imports in the United States. It is among the largest part of the Balance of Payments thus can have serious effect on the USD’s value. If the number is positive, it indicates that there are more exports than imports.
A negative number reflects more imports than exports. This figure has impact on the USD since export demand and currency demand are connected due to forced currency conversion. Non US residents/companies are forced to convert into USD to pay for exports thus driving up the value of the U.S. dollar.
Trader Take:
The U.S. dollar has simply been on a tear lately against the Euro. However the 1.3300 range looks like strong support for the Euro/USD pair. The Trade balance is forecast to be negative 38.4B, down from the last release of negative 37.3B. If this forecast is missed, expect a short sharp move in the EUR/USD pair.
David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.