This is one of Goldman’s ’high-conviction’ FX calls for 2026
Germany’s latest trade figures point to a fragile but still functioning export engine, offering a degree of stability after months of tariff-driven turbulence. Exports rose 0.1% in October and helped push the trade surplus to 16.9 billion euros, a wider balance than September’s 15.3 billion euros. The headline improvement masks a deeper divergence across markets, as shipments to the U.S. fell 7.8% following a brief rebound in September.
The drop in U.S.-bound exports confirms that demand has not regained momentum after the tariff shock. September’s uptick now appears to have reflected short-term restocking rather than any structural improvement. German exporters continue to face uncertain pricing, lengthened delivery times, and a market that is recalibrating supply chains around higher import costs. The pressure is compounded by weaker activity in China, where both exports to and imports from Germany declined in October.
The counterweight comes from within Europe. Trade with eurozone partners strengthened, with exports rising 2.7% and imports up 2.8%, providing the most reliable source of demand in an otherwise muted global environment. This shift toward regional resilience illustrates a broader adjustment. Firms are relying more heavily on shorter routes, more predictable orders, and markets untouched by tariff barriers. The result is a trade profile that remains stable even as global conditions soften.
The wider surplus offers mild support for the euro, which has been trading near the mid-1.08 area in recent sessions. German bond markets have reacted calmly, with 10-year Bund yields holding close to 2.2% as the data reinforces expectations of subdued external demand and moderate domestic activity. Industrial equities may find some relief in the stability of EU trade, although exporters with high exposure to the U.S. and China remain constrained by weak order flows and tariff uncertainty.
The near-term path depends on whether Washington and Brussels make progress on tariff discussions. Any sign of de-escalation would quickly brighten the outlook for Germany’s capital-goods and automotive sectors. Until there is clarity on the policy front, the most realistic base case is continued uneven performance. EU demand should prevent a sharper downturn, while non-EU markets lag. The main risk is a renewed escalation in U.S. trade actions or another slowdown in China, either of which could strain Germany’s current export cushion.
Germany’s October numbers show stability rather than revival. For investors, the key is whether regional strength can hold long enough to offset weakness abroad. Selective positioning within European industrials remains more prudent than broad directional exposure until global demand signals improve.