Eurozone jobless hits a new high
The rate of unemployment in the eurozone rose to a fresh high in November after 113,000 workers lost their jobs. The unemployment rate rose to a record 11.8% for eurozone. Spain was worst effected with unemployment running at 26.6%, while Germany’s rate is considerably lower at 5.4%. Despite the loss of jobs, retail sales in the region rose by 0.1% in November compared to the previous month, but were still down 2.6% on twelve months earlier.
The mixed bag of data releases for the eurozone continued as morale among businesses improved again in December according to the European Commission’s monthly business and consumer survey. Economic sentiment across the region rose for the second month as the index improved from 85.7 to 87. Despite this improvement, the level remains weak compared to historic standards.
Also in the eurozone, German industrial orders fell by 1.8% in November, reversing nearly half of October’s gain. The drop was driven by foreign orders falling by 4.1% month-on-month, while domestic orders expanded by 1.3%. Demand from outside the eurozone was particularly disappointing contracting by 6.5%. While an improvement in the Germany economy is likely going forward, this data confirms it is going to be bumpy recovery.
On the FX markets, GBP/USD traded in tandem with EUR/USD for much of the session and as a result settled lower as market participants remained sceptical over growth prospects for the Eurozone and speculated of a potential rate cut by the ECB. The MPC meeting this Thursday is unlikely to result in an announcement of any new policy easing measures. In terms of UK related commentary, UK inflation expectations for year ahead fell to 2.7% in December from 2.8% in November according to YouGov/Citi. Inflation expectations for the next 5-10 years dropped to 3.3% in December from 3.4% in November. In terms of technical levels, supports are seen at 1.6022/10 and then at 1.6002. On the other hand, resistance levels are seen at the 21DMA line at 1.6165 and then at 1.6289 which is the 21DMA upper Bollinger level.