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German Unemployment Falls to Record Low Levels

German Unemployment Falls to Record Low Levels

2017-03-31 08:16:00
Nick Cawley, Analyst
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Talking Points

- EURUSD retains early gains on strong German unemployment release.

- German economy looks in good shape, with growth rising and inflation subsiding.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

Unemployment in Germany fell to its lowest level since reunification in March and could fall lower, according to a report by the Bundesbank. Unemployment fell to 5.8% from a prior 5.9% with the monthly total falling by 30,000 compared to analysts’ expectations of a fall of 10,000.

The central bank’s experts wrote recently that an administrative error ‘made it look as if labor market conditions were subsiding’ and that the coming months could see a ‘considerable uptick in job creation.’

Total unemployment in Europe’s largest economy dropped to 2.662 million from February’s 2.762 million.

The German economy is currently performing well, with the latest data showing GDP growth of 0.4% in 4Q 2016 and yearly growth of 1.9%, the strongest in five years. The latest inflation data was also well received, with CPI falling to 1.6% y-o-y in March from 2.2% in February due to lower energy and food prices. German officials have become increasingly vocal in the last months over the level of domestic inflation, due in part to the weak level of the EUR.

EURUSD picked up a touch on the release, keeping Friday’s early gains. The single currency has been weak of late, hitting a two-week low on Thursday. Looking ahead, the EUR may still see downward pressure as Brexit negotiations start in earnest. The chairman of the EU 27 leaders, Donald Tusk, released a draft plan for Brexit negotiations on Friday, a process that looks set to dominate the headlines and shape EUR trading over the coming months.

EURUSD: Five-Minute Timeframe (March 31, 2017)

German Unemployment Falls to Record Low Levels

Chart by IG

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

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