German Current Account - Economic Data Preview

Germany’s Current Account surplus is set to narrow in January to print at 9.2 billion euro from 12.3 billion in the preceding month. The seasonally adjusted decline in exports (-4.0%) is set to outpace the drop in imports (-3.5%) on dwindling demand for German manufactured goods. Indeed, factory orders have fallen -27.7% and industrial production has shed -12.0% in the year to December. On the capital side of the equation is likely to add to downward pressure: German stocks slipped -10.7% through January while the Euro lost -7%. The overall external balance for the Euro Zone has trended lower, down -67.3% through 2008. Meanwhile, the US trade gap has considerably narrowed, with December result showing the smallest monthly shortfall in nearly 5 years. From a long-term perspective, this implies a net outflow of money from the regional bloc and into the States, making for structural downward pressure on the EURUSD exchange rate.