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US Merchandise-Trade Balance hits 10-Month Low, US Dollar Remains Steady

US Merchandise-Trade Balance hits 10-Month Low, US Dollar Remains Steady

Dylan Jusino, Contributor


Talking Points:

- US Advance Goods Trade Balance came in below projections in August at -$65.9 billion; the advanced figure was revised up at -$63.9 billion.

- US Dollar does not see much price action despite the better than expected trade balance

- See the DailyFX Economic Calendar for upcoming economic data and for a schedule of live coverage see the DailyFX Webinar Calendar.

See our longer-term forecasts for the US Dollar, Euro, British Pound and more with the DailyFX Trading Guides

The Advance Goods US Trade Balance beat estimates in August coming in at -$62.9 billion versus -$65.1 billion forecasted. The previous figure, July, also saw an improvement as it was revised from -$65.1 billionto -$63.9 billion. Exports came in at $128.9 billion and imports came in at $191.8 billion.

The trade balance, or net exports, is a component of gross domestic product and is one of the biggest components of the US’s balance of payment. This economic indicator gives insight on the value of the dollar. When exports are greater than imports US experiences a trade surplus. Conversely, if imports exceed exports the US experiences a trade deficit. A strengthening US Dollar encourages American consumers to import more from abroad, while also discouraging foreigners from purchasing American-made goods as they become more expensive, relatively speaking.

With heightened talks of protectionism the trade balance has become a more prominent topic of discussion. A lot of uncertainty remains around future trade policies from a regulatory perspective. As inventories pile up this may be an indication of less trading activity attributable to the major storms in the south last month. For a full-detailed reports from the Census Bureau see the Advance Economic Indicator Report.

Here are the data pushing the US Dollar slightly higher this morning:

- USD Gross Domestic Product (Annualized) (2Q T): 3.1% versus 3.0% expected, from 3.0% previous.

- USD Wholesale Inventories (AUG P): 1.0% versus 0.4% expected, from 0.6% previous.

- USD Advance Goods Trade Balance (AUG): -$62.9B versus -$65.1B expected, from -$63.9B (revised higher from -$65.1B).

Chart 1: DXY Index 15-minute Chart (September 28, 2017 Intraday)

Immediately following the data, the US Dollar Index traded slightly higher. The light move did manage to establish a 93.18 intraday support level. At the time of this report the dollar was not trading much high than that.

--- Written by Dylan Jusino, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.