ATFX: The US May trade balance is about to be released, with the market expecting a deficit of 78.5 billion USD.
ATFX Market Commentary: At 20:30 today, the U.S. Bureau of Economic Analysis will release the May trade balance. The previous figure was a deficit of $55.9 billion, with the market expecting a deficit of $75.8 billion, an anticipated increase of $19.9 billion. The trade balance reflects the change in value between imported and exported goods and services. A surplus indicates strong exports, which is beneficial for enhancing the international status of the US dollar; a deficit indicates strong imports, which helps increase global US dollar liquidity.
Figure 1, US Trade Balance Bar Chart for the Past Three Years
The United States has consistently run a trade account deficit since 1971. The significance of the trade balance data lies more in observing changes in the total deficit amount rather than when it might turn into a surplus. Over the past three years, the absolute value of the US trade deficit peaked in March 2025 at a deficit of $132.983 billion, which is related to the aggressive foreign policies following Donald Trump's move into the White House.
For the past four months, the US trade deficit has remained between $54.185 billion and $56.585 billion, a range that represents the normalized level of the US trade deficit over the past three years. The current market expectation of a $75.8 billion deficit is significantly higher than this normalized state. If realized, it would suggest signs of an expanding US deficit, potentially casting doubt on Trump's strategic vision of "manufacturing repatriation."
Figure 2, EURUSD Minute-Level Chart
The April trade balance was released on June 9th at 20:30, corresponding to the red area in the chart above. After the data release, EURUSD rose from 1.1568 to 1.1572 within three minutes, a move of 4 basis points. This shows that the release of trade balance data has a relatively weak impact on EURUSD, falling short of the influence that Non-Farm Payrolls or CPI data have on the market. The May trade balance data to be released this evening faces a similar situation; even if the data slightly exceeds expectations, it is unlikely to have a significant impact on EURUSD or precious metals markets.
Focusing on the trade balance data is primarily to analyze the direction of the US macroeconomy and thereby anticipate the Federal Reserve's monetary policy trajectory. While a tightening monetary policy is beneficial for boosting the US Dollar Index, a stronger dollar is detrimental to US goods exports and could widen the deficit scale. This creates a point of contradiction with Trump's strategy. If the trade deficit amount draws Trump's attention or invites criticism, the Federal Reserve may step in to guide market expectations towards a looser monetary policy.
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