THE TAKEAWAY: German trade balance drops to 12.0 billion Euros in December -> The 2012 trade surplus was the second highest on record -> Euro trading drops slightly

The German trade balance fell to a 14-month low in December despite a drop in imports and a rise in exports. The 12.0 billion Euro trade balance was worse than the expected 15.0 billion surplus and lower than November’s revised 16.9 billion Euro trade balance. Exports increased by 0.3% in December, while imports declined 1.3%, according to the Federal Statistical Office.

The foreign trade balance for Germany was 188.1 billion Euros for 2012, the second highest surplus on record.

The German economy has suffered from the effects of the Euro debt crisis, and growth slowed to 0.2% in Q3 of 2012. Exports made up 50% of the German GDP in 2011, therefore a rise in exports is a good sign for expansion in Q4. Signs of economic growth in the Euro-zone’s biggest economy are Euro positive.

That is why the Euro declined on news of the worse than expected German trade balance. EUR/USD fell below 1.3400 in Forex markets, and support may be provided here by a broken support line around 1.3374.

EUR/USDDaily: February 8, 2013

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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