THE TAKEAWAY: German unemployment fell in January -> Germany continues to struggle with growth issues -> Euro strong after yesterday’s weakness
Job data out of Germany released today showed unemployment levels in January falling to 6.7% from the expected and previous 6.8% as the number of unemployed decreased by 34,000 on a seasonally adjusted basis. Economists had been expecting a smaller decease of 10,000.
Italian unemployment, which was also released today, came in higher than expected at 8.9% versus the expected 8.7%.
Throughout the ongoing credit crisis and the growth downturn brought on by it, Germany has retained low unemployment numbers as it exports have been propped by domestic demand which has caused above average growth in Germany vis-à-vis the rest of Europe.. However, weak retail sales data released earlier today hinted that this could change in the near future. EU leaders yesterday signed a fiscal pact meant to stimulate growth in the region; however, the imminence of a Greek default remains on everyone’s mind as Greek PSI deliberation continue.
The Euro was strong on the day, boosted by the better than expected German job data. However, the price action remained classified as corrective with the market locked in a broader underlying downtrend. Any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption.
