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Trade Balance

Importance: Great ***

Influence: Forex, Equity Markets

US Release: monthly between the 8th and the 12 day of each month (two months prior -each month is released the figure of two months ago) by the US Bureau of Economic Analysis

EU Release: Europe’s International Trade figure is released monthly between the 13th and the 18th day of each month (two months prior -each month is released the figure of two months ago)

 

Introduction to the Trade Balance Account

The trade balance of a country is a general measure of the country’s competiveness. The trade balance is simply calculated by deducting imports from exports:

□ If exports exceed imports then a country is enjoying a trade surplus.

□ If imports exceed exports then the trade balance is negative and the country suffers from a trade deficit.

US Trade Balance

 

The Effect of Trade Balance in the Forex and Equity Markets

The effect of trade balance is almost common for all markets. A better Trade Balance (higher surplus or lower deficit) the better for the domestic currency and the domestic equity markets.

◙ The higher the Trade Surplus the better for the domestic currency and for the domestic equity markets.

◙ The higher the Trade Deficit the worst for the domestic currency and for the domestic equity markets.

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US Non-Farm Payrolls / Unemployment Report

Importance: Great ****

Influence: Forex, Equity Markets, Commodity Markets, Bonds Market

US Non-Farm Payrolls / Employment Report: The US NFP report is released on the 1st Friday of every month by the US Bureau of Labor Statistics.

European Unemployment Report: EU Unemployment Release: Monthly by Eurostat, usually during the last day of each month or the first day of the next month

 

The US Non-Farm Payrolls

The employment reports are released on the first Friday of every month covering the previous month. The report includes:

  1. information on unemployment
  2. job growth, and
  3. payroll data

The most important statistic is the non-farm payroll data. The US non-farm payrolls (NFP) account for about 80% of the US working force who contribute to the US GDP. In general the higher the NFP report the higher the expected consumer spending and consumer confidence and therefore the higher the expected growth. The US non-farm payrolls (NFP) include all US workers except:

(i) Farm workers

(ii) Household (private) employees

(iii) Government employees

(iv) Some workers of non-profit organizations

US vs EU Unemployment