Europe, if it didn’t already exist you’d be hard pressed to come up with such a unique creation of civilization. It’s history is ageless but one of the major themes that has been present through practically all of that tale, is trade. The buying and selling of things is a very strong foundation in our evolutionary lives, and has immediate and long term ramifications for all societies. For those of us who have chosen to buy and sell currencies the ‘immediate’ is where our objectives are focused, but nevertheless it is sometimes interesting to look at the bigger buying and selling picture to understand potential new general economic trends that may help us.
The bigger trade picture is centered around import and export figures, that in turn lead us to look at flows of money between countries and therefore get a feel for potential longer term trading opportunities. Construction materials like steel and iron for example, are heavily exchanged and play an important role as a construction indicator, where there is construction there is investment. Construction output is up by 7.6% in Europe and industrial new orders are up by 5.2% (eurostat). Spanish construction has of course slowed dramatically but that is in a bubble of it’s own, I’m interested in a more general view of the whole Eurozone.
The graphic below shows the USA’s trade with the EU from the beginning of this year. As you can see the balance has been widening quite quickly. www.census.gov
Trade with European Union : 2010
NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified.
| Month | Exports | Imports | Balance |
|---|---|---|---|
| January 2010 | 18,653.1 | 21,455.4 | -2,802.3 |
| February 2010 | 17,887.2 | 23,208.8 | -5,321.5 |
| March 2010 | 20,983.2 | 28,045.3 | -7,062.2 |
| TOTAL | 57,523.5 | 72,709.5 | -15,186.0 |
The US and Europe between them make up half of all world trade, but what is becoming increasingly frequent these days is to see trading restrictions coming into play, thus moving the idea of protectionism clearly to the forefront of economic thinking. If unemployment keeps increasing as shown today (10.1%) this protectionism could really take political hold and slow economic recovery.
“In the business world, the rear view mirror is always clearer than the windshield.” – Warren Buffet
You can follow George Richards at his blog http://forexdawn2010.blogspot.com
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