No change was recorded in the number of unemployed people in Germany, but the unemployment rate fell to 6.7% – quite a contrast to the rest of the continent.
EUR/USD makes another attempt to get back above 1.24.
Early expectations stood on a drop of 7000 of unemployed people. Last month, Germany saw a disappointing gain of 19K in the unemployment change. This was now revised to 18K.
Nevertheless, the drop in the unemployment rate from 6.8% to 6.7% sets the tone. The unemployment rate in the euro zone is far higher than Germany’s: 10.9%. Germany, the locomotive of the euro-zone, keeps it at this level and not higher. Nearly every fourth Spaniard is unemployed.
Earlier, retail sales in Germany surprised to the upside, rising by 0.6%, much better than a minimal rise of 0.1% that was predicted. This came on top of an upwards revision of last month’s rise: 1.6% instead of 0.8%.
Also Europe’s second largest economy, France, posted positive data: consumer spending advanced by 0.6%, double the early expectations.
These positive numbers helped EUR/USD rise above 1.24, but this comeback was very temporary, and the pair fell towards the publication of Germany’s employment numbers.
Later, the first estimate for headline inflation for May is released. A small drop to an annual level of 2.5% is awaited. It’s important to remember that the debt crisis takes most of the attention, with Spain in the limelight (rising yields), Greece just behind it and Italy hiding for now.
For more on the common currency, see the Euro USD forecast.