EUR/USD Fighting for $1.3600 Despite German Labor Data Beat

DailyFX

Talking Points:

- German Unemployment Rate Drops to 6.8% in January.

- German Unemployment Change beats expectations at -28K.

- EURUSD maintains $1.3600 at the time of writing.

The German labor market report for January beat expectations, with the Unemployment Change decreasing by -28K (or in other words, the economy added +28K jobs), well-below economists’ forecasts calling for a drop of -5K. The German Unemployment Rate was revised to 6.8% from 6.9% in the month of December, and was reported at 6.8% in the month of January. Overall, the report looks strong based on the headline figures alone.

These strong numbers come at an uncertain time for the Euro-Zone. The Euro-Zone money supply growth slowed to 1.0 percent – the slowest pace since September 2010, and fueling the argument that Europe is facing deflation risk, according to DailyFX Chief Currency Strategist John Kicklighter. However, in absence of a crisis, there is an argument to be made that the ECB will opt for a softer solution than another outright liquidity injection.

EURUSD 5-Minute Chart. January 29, 2013 Intraday

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EURUSD_Fighting_for_13600_Despite_German_Labor_Data_Beat_body_x0000_i1027.png, EUR/USD Fighting for $1.3600 Despite German Labor Data Beat

Charted created by David Maycotte using Marketscope 2.0.

The EURUSD was relatively unchanged around the release of the German labor data, having fallen by 12-pips to $1.3610 at the time of writing. The EURUSD was only about 50-pips lower than its pre-FOMC level, but was being pressured lower by the release of the ECB’s 4Q’13 Bank Lending Survey, which showed rather dour economic conditions despite a steadying in credit growth (albeit at a low level).

--- Written by Christopher Vecchio, Currency Analyst and David Maycotte, DailyFX Research

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

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