The single currency slipped against the Dollar and most of its peers this morning following the release of poor economic data out of the Euro zone. Unemployment has reached a record high hitting 11.1% in May, a rise of 1% from April. It is the highest level since records began in 1990. The highest unemployment rate was recorded in Spain, where nearly one in four people are out of work, closely followed by Greece.
In total, 17.6 million people were out of work in the Eurozone in May, 1.8 million higher than the year before.
Youth unemployment across Europe rose again with another 282,000 young people (under 25) out of work compared with a year ago with 254,000 being in the Eurozone. Youth unemployment now stands at a dismal 22.6% in the Eurozone and 22.7% across Europe, a total of 5.517 million. Once again, the youth jobless data showed deep differences between the countries which make up the Eurozone. Germany boasts the lowest youth jobless rate at just 7.9%, followed by Austria at 8.3% and the Netherlands with 9.2%.
The situation is bleakest in Spain and Greece, with 52.1% each. The theory of the lost generation appears to be coming true and is sure to have a devastating impact across the region in the next decade.
The Euro had seen a surge on Friday following a key EU summit in Brussels. European leaders agreed on a plan to use the Euro zone’s emergency bailout funds to directly assist struggling banks without adding to a nation’s sovereign debt. As well as the funds directly recapitalizing Spain’s banks the bailout funds would be used to purchase government debt in order to keep down borrowing costs. Previously Spain was paying up to a record 7% interest on its bond yields a price that if maintained would have priced the country out of the market.
The disappointing economic data has caused investors to speculate that the European Central Bank will cut interest rates. The ECB has kept rates at a record low of 1% since December and any rate change could see them cut the figure by 0.25%. The cut could happen on the 5th of July as the ECB makes its monthly interest rate announcement.
If the ECB does make the cut then the Euro is likely to quickly retract on the gains it made last week.
The Pound to Euro exchange rate is currently trading at 1.241
The Pound to US Dollar exchange rate is currently trading at 1.567
The Euro to Australian Dollar exchange rate is currently trading at 1.230
The Euro to US Dollar exchange rate is currently trading at 1.262
The Euro to Pound exchange rate is currently trading at 0.805
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