Euro Dives Following Unexpected Rise in German Unemployment
THE TAKEAWAY: German unemployment for June unexpectedly rises to 6.8% -> German official says not to expect banking union deal at summit ->EURUSD Bearish
The German unemployment rate notably rose for the first time in 3 years, as the Eurozone’s usually strong economy shows further signs that it is feeling the pain of the European debt crisis.
The new German (seasonally adjusted) unemployment rate was reported at 6.8%, as opposed to the expected unchanged rate of 6.7%. Seven thousand more people found themselves without work in June, for a total of 2.88 million people unemployed, as opposed to the expected change of 3 thousand more. In May, there was a rise of one thousand people unemployed and a rate of 6.8%, as opposed to the previously estimated stagnant unemployment, according to the German Federal Labor Agency.
The Euro experienced major losses against the dollar following the release, dropping from above 1.2500 in the hour before the release down to 1.2400. The decline broke a small-term 70-point range created earlier this week.
The grim data comes in only hours before the European leaders are set to start their two day EU summit in Brussels. Ahead of the summit, a German official made numerous statements lowering hopes for possible accomplishments by the leaders. The official said that neither a banking union nor an EU treaty will be decided at the summit, and bank recapitalization should be kept at a national level.
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