Euro area external surpluses remain large in September

The euro area’s external surpluses continue to be large despite the considerable appreciation of the euro witnessed earlier in the year. In September, the euro area current account surplus rose to a record high of EUR 37.8 billion. After the release of robust export data earlier this week, it was not a surprise that the increased trade surplus accounted for the rebound in the current account, illustrating how stronger global demand is underpinning the euro area manufacturing sector and economy as a whole.

There were no signs in these data that the robust euro represents an impediment to euro area competiveness. Other major current account components were little changed on the month, with the income account still in surplus as foreign residents’ earnings on their investments in the euro area continued to be considerably below recent norms, noted Daiwa Capital Markets.

While the current account surplus reached a new nominal high, however, given the strong growth over recent quarters, it fell as a share of GDP on a 12-month cumulated basis to 3.2 percent of GDP, 0.2 percentage point lower than a year earlier.

“Overall, the strength of these external accounts provided good reason to expect the euro to remain relatively firm even against the backdrop of Federal Reserve monetary tightening”, added Daiwa Capital Markets.

At 19:00 GMT the FxWirePro's Hourly Strength Index of euro was neutral at -13.2107, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -19.3418. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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