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German Trade Surplus Narrows as Global Demands Falter

Tuesday, 09 September 2008 11:13:16 GMT  |  David Song, Currency Analyst

Fundamental Headlines

• Mortgage Bailout Is Greeted With Relief, Fresh Questions– Wall Street Journal
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• Financial stocks push Europe stocks higher– Financial Times
• Volatility Hedge Funds Outperform Industry First Time Since '03 – Bloomberg
• Wells Fargo Tops Citigroup to Become No. 3 Bank by Market Value – Bloomberg

·    EURUSD – The German trade surplus narrowed from a record high of 19.9B to 13.9B in July due to a significant drop in export demands. A breakdown of the report showed that exports fell 1.7% versus an expected decline of 1.1%. Meanwhile, imports rose at its fastest pace in 6 years, surging to 7.4% from -0.4% in June. Fading demands paired with stalled growth has certainly taken a toll on Europe’s largest economy, and may lead the ECB to lower the benchmark interest rate ahead of schedule as the growth outlook turns bleak. For more news and resources, visit our EUR/USD Forum.

·    GBPUSD – The growth outlook for the U.K. economy remains bleak as manufacturing activity fell for the fifth consecutive month to its lowest level in more than a year. Manufacturing production dipped to -1.4% in July, while industrial production slipped to a three year low of -1.9%. Higher input costs paired with slowing demands from the global economy has clearly weighed on the U.K. economy, and conditions may only get worse as Europe’s second largest economy is on the brink of a recession. For more news and resources, visit our GBP/USD Forum.

·    AUDUSD – Australian business confidence improved slightly, rising 2 points to -7 in August. Amid the minor improvement, the index continues to hold in negative territory for the eighth consecutive month, and remains near a the record low reading of -9 posted in July. Meanwhile, the BRC retail sales index inched higher to 0.1% in July, but remains subdued as consumers grapple with higher living costs. For more news and resources, visit our Australian Dollar Currency Room.

 

 

To contact the author of this article, please email: dsong@fxcm.com

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