The euro zone seasonally adjusted trade balance showed a significant narrowing in the surplus. The euro zone trade surplus fell from a downwardly revised €9.3 billion to €7.9 billion, while the consensus was looking for only a slight decline in the deficit. Also the details are quite disappointing with exports falling for the first time in three months, by 2.0% M/M and also imports dropped in July (by 1.2% M/M). In the second quarter, the contraction in euro zone activity was mitigated by exports, which held up quite well. The weakening in exports is therefore worrying sign and marks a poor sign for the third quarter, raising expectations that the euro zone will fall back into recession in the July-September period.