According to data published by German statistics agency Destatis, Germany’s trade surplus widened from €17.4bn to €18.4bn in September.
However while the surplus expanded, the data showed that German exports took a sizable hit at the end of the third quarter, contracting 0.8 per cent and missing expectations of a 0.3 per cent rise, as global trade tensions appeared to dent demand.
Most worrying for EUR investors is that today’s trade figures, alongside some weak industrial figures from earlier in the week, bode poorly for Germany’s upcoming GDP figures.
Carsten Brzeski, Chief Economist ING Germany explains: “Today’s trade data ends a disappointing week for German industry. Available monthly data suggests that the economy had its worst quarterly performance in 3Q since the beginning of 2015.
“The first GDP estimate will be released next week on Wednesday.”
Meanwhile the pound continues to firm this morning as Sterling sentiment is lifted by hopes of an imminent Brexit deal.
While there are no new headlines suggesting that the government may be any closer to solving the issue of the Irish border a number of analysts have begun to make hawkish bets on a deal sparking a substantial rally in the pound.
James Athey, Money Manager at Aberdeen Standard Investments suggests: “A deal would mean the next two years would be under EU-equivalent conditions. It has the potential to trigger the sharpest appreciation in a long time.”
Looking ahead to the very end of the week, we could see GBP/EUR exchange rates test the waters of €1.15, following the publication of the UK’s latest GDP figures.
Economists forecast Friday’s data will show a marked rise in UK economic growth in the third quarter, with GDP expected to rise from 0.4 percent to 0.6 percent as the warmer weather over the summer helped to spur consumers to spend more.
Meanwhile a lull in Eurozone data may leave the euro vulnerable to further losses tomorrow, especially if markets remain bearish towards the single currency.