Trade Balance

A positive Trade Balance (surplus) indicates that exports are greater than imports. When imports exceed exports, the US experiences a trade deficit. Because foreign goods are usually purchased using foreign currency, trade deficits usually reflect dollars leaking out of the country.

Such currency outflows may lead to a natural depreciation of a dollar, unless countered by comparable capital inflows (US Net Foreign Security Purchases, or TICs data reports on such capital flows). At a bare minimum, deficits fundamentally weigh down the value of the currency.