The Euro, is the official currency of 17 of the 27 member countries of the European Union (EU), this means it is supported by no single country, a fact that makes it rather unique in foreign exchange trading, especially among the main world currencies. The European Union itself is the world’s largest exporter and has the world’s largest GDP, surpassing that of the USA, China and Japan.
The Euro Zone Economy and the Euro
Where the health of a country’s economy generally helps determine its value when compared to that of another currency, in the case of the Euro it is the economic health of a number of countries that has to be taken into consideration. For instance if Germany was experiencing a strong economic period while Greece may still be weak, the value of the Euro would probably suffer little damage as Germany, France and Italy make up two thirds of the Euro Zone GDP. This means that when monitoring the statistics of the whole EU with the help of Eurostat, it is important to gather the relative information from France and Germany as separate identities in order to get a better perspective of how the currency is actually performing overall.
The same theory applies in Australia as the Australian dollar represents all Australian states, the resource rich economically sound states and the less endowed. A similar analogy can be said of the US dollar representing the whole of the USA. In world ratings, the Euro is only second to that of the US dollar, it is the second most traded currency and either a primary or reserve currency in many other countries.
The Euro and Manufacturing
Apart from Norway, the Euro Zone is mostly an exporter of industrial products to the world. Its manufacturing exports are a larger proportion of its GDP than that of the US or Japan. It is therefore largely an importer of commodity goods a factor in determining its economic health at any one time which leaves the most significant part of its economy as manufacturing and services.
Forex traders need to take into account that the Euro Zone’s main trading partners are other European countries, therefore the value of the Euro is generally dependant on other nations such as the UK, Russia and Switzerland.
The biggest benefits to be gained by trading in foreign exchange rates, besides the possibility of making a comfortable sum of money, is that you are trading in the economies of different countries with diversified strengths such as the Euro, and not that of individual companies or corporations.
Teresa writes about forex trading online for Forex Trading Finder where you can compare foreign exchange brokers to get the best forex reviews.
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