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Weak German Trade Weighs on Euro

Last updated 3/10/2010 3:00 AM ET (GMT -5) 2 Comments

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Boris Schlossberg

Director of Currency Research, GFT

German Trade Balance printed much worse than expected at 8.7B versus 16.4B forecasts as exports slid by -6.30%. This was the weakest reading since the March of 2009 when the global economy was in the throes of its worst contraction in post war period. The news was especially surprising given the decline in the EUR/USD over the past several month. Nevertheless exports plunged by -6.3%  their sharpest decline since March of 2009 although they were marginally higher than January of 2009

German exports have been the sole ray of sunshine in the Eurozone in what has otherwise been a very lackluster economic performance  in the region. Today’s data undermines the euro bulls argument that  lower exchange rates will spur export demand driving  Eurozone growth in 2010. However, its too early to tell if the downside surprise in January is simply a one off seasonal occurrence or the start of a larger more troubling trend.

In either case, the Trade Balance data was not helpful to the single currency which has been battered by concerns over sovereign debt problems of Greece, Portugal and Spain. The EUR/USD fell by 20 points in the aftermath of the release and remains trading at session lows at 1.3565. If risk aversion trends accelerate as the day progresses the pair could make run at the 1.3500 level as investor disillusionment grows.

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Comments (2)

Redders

March 10, 2010 at 07:18 AM ET

Why since the release of the German Trade Balance figures has the Euro rallied against both the USD and JPY? Currently 1.3611 and 123.01 These were unexpected and poor figures!!

bschlossberg

March 10, 2010 at 10:27 AM ET

There is a very strong short squeeze going on. The numbers may be being shrugged off as one off event due to weather distortions

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.