The euro area is also seeing slowing in some other large member economies. Global weakness in trade and manufacturing has also weighed on Japan. The slowdown in foreign demand spills over into the United States through a variety of channels.
Although the dollar has weakened somewhat lately, its earlier appreciation and slowing foreign growth contributed to a decline in exports and a fall in import prices over the second half of last year. In contrast, the recent step-down in longterm rates and easing in the dollar have lessened pressures on yields in emerging markets and provided more policy space in some cases.