German Unemployment Fell in November; Italian Unemployment Up

THE TAKEAWAY: German unemployment falls -> Europe’s growth crisis continues -> Euro continues to drop

European data released today showed German unemployment falling to 6.9% in November, below the expected 7.0% mark which was also last month’s figure. The number of unemployed people in Germany fell by 20,000 instead of the 5,000 as had been predicted by economists. On the flip side, Italian unemployment rose to 8.5% in November from 8.3% in October.

Today’s numbers highlight current developments in the Eurozone which as been seeing a split between the more wealthy core nations which also have healthier economies, and the southern nations like Italy and Greece which have been experiencing serious credit issues. Recently, many have warned of diminished growth in the Eurozone as evidence of crisis spillage into the core nations. Germany failed to find bids for nearly a third of bunds in a recent bund auction, and although the tab was eventually picked up by the ECB, the shock made the Euro plummet to new lows.

Although the Euro has rallied in recent days, Wednesday price action appears to show the Euro and other risk-correlated currencies reversing their gains and resuming their weakness in favor of the US Dollar. Look for a break under September’s lows by 1.3145 to accelerate declines.