Falling Exports a Bad Sign For Eurozone GDP

The euro traded steadily at $1.31 on Wednesday morning as investors awaited US Federal Reserve Chairman Ben Bernanke's testimony before congress. Last week, Bernanke's remarks that the Fed was planning to continue its $85 billion per month stimulus plan into 2014 sent the dollar tumbling. Now, although no surprises are expected from the testimony, investors are cautious about the dollar ahead of Bernanke's report. In the eurozone, data suggested the region has had yet another quarter of recession as both imports and exports fell in May.

reported that eurozone exports fell 2.3 percent and imports slipped 2.2 percent. The figures marked the second consecutive month of sharp drops in exports and the largest month to month change since June 2011.

The data also showed a trade surplus of 15.2 euros in May, a huge jump from last year's figure of 6.6 billion euros. However, the surplus is the result of a 6 percent drop in imports rather than increasing exports, which indicates weak domestic demand. Although some analysts have predicted that the eurozone would see a gradual recovery over the course of 2013 and could eventually turn to growth in 2014, the predictions are largely dependent on the state of the rest of the world's economies as well. At the moment, the global economy is struggling to pick up, which is reducing the market for eurozone goods. Without a demand for its exports, the eurozone will find it difficult to pull out of the ongoing recession. The data has many looking to the European Central Bank's next policy meeting and wondering if the bank will cut interest rates from 0.5 percent to .25 percent.