Generally, a country exports goods and services to other countries and imports goods and services from other countries as business deal. The import and export international business of goods and services which are particularly based on country’s economy union in the form of value difference during a time period conduct balance of trade in economic world. These includes economic transactions relating to country’s capital movement, loans, tourists expenditure, insurance charges, repayments where trade balancing of payments is major part of economic unit.
Trade balance theory
If your exports exceed your imports, you can say your trade surplus is favorable. On the contrary, if your imports exceed your exports than unfavorable trade deficit exists. The balance of trade depends on current account, where net international through investment income position and aid is included. A surplus increases net international asset state of country whereas, deficit decreases regarding current account.
Trade surplus runs correspondingly with higher rate of savings and lower the rate in savings tend to trade deficits. However, in business flow cycle you will see trade balance differs. In expansion of economic, trade balance improves if the exports tend to growth, where on other side trade balance may get worse if import or domestic demand tend to growth.
The balance of trade indicator in economic field where trade deficit occurs may be helpful and good in case of expansions but not during recessions. These BOT are divided sometimes into services balance and goods balance. Safety standards, health and environment like non tariff barrier may also affect the BOT. Furthermore, you should see what’s the importance of currency code – ISO 4217 in financial economy? For every investors investing on trades.
The US dollar weakened even more from the past headlines. Donald Trump said that ump stated in an interview that he is not thrilled with the Fed hiking rates. He also said that Fed should do more to help him boost the economy. Europe and China of manipulating their own currencies – accused by Trump. We could expect for US dollar weakened even more in future, if we get some highlights.
EUR/USD rallied yesterday and during Asian session, breaking the 1.1482 resistance line and testing the 1.1537 resistance level. We could see the pair breaking the 1.1537 resistance line and aim for the 1.1623 resistance level. On the other side, we could see the pair breaking the 1.1482 support line.
A report prepared by the UK government showing that the UK economy will be hit in any Brexit scenario leaked yesterday. Government ministers tried to play down the importance of the report, however media persisted on the issue. The issue seems to be confirmed as U.K. banks may have limited access to the EU single market after Brexit as reported by various media sources, hence confirming EU’s chief Brexit negotiator Barnier’s recent statement. On the inner political front, Theresa May, may be facing a small rebellion within the Tory party. 48 votes are required to trigger a leadership contest within the Tory party. These should not be good news about the GBP as political instability may increase and should the negative headlines continue, the GBP could be weaken.
In contrast to yesterday’s forecast for a bearish market, cable posted some gains, testing the 1.4175 resistance line. We see the case for cable to trade in a sideways manner. Despite yesterday’s rise, we see the case for the pair to enter a slightly bearish market as the greenback side of the pair may strengthen by today’s fundamentals and financial data. Should the bulls take the reins of the pair’s direction we could see it breaking the 1.4175 resistance level and test the 1.4325 resistance barrier. Should the bears have the upper hand, we could see the pair breaking the 1.4040 support line and hover slightly below it.