Back to back publications of trade balance figures from Italy and the broader euro zone today highlighted a downturn in regional exports, likely connected with the upsurge in EUR values and downturns in demand for manufactured goods. The added buying power of the EUR, moreover, has helped hike import levels and the result has been a widening trade deficit this past month.
The data comes as little surprise as many investors expected the region’s deficits to worsen. Growing strength of the EUR, as previously mentioned, coupled with sluggish manufacturing and industrial output no doubt will generate widening trade deficits in most of the developed world this summer. The EUR was seen trading mildly bearish as a result of the news, however, as investors anticipate an economic slowdown in the region.
