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Eurozone Unemployment Holds, EUR USD Exchange Rate Stabilises

  • EUR USD Stabilises Following Eurozone Employment Data – Unemployment rate holds at seven-year low.
  • German Trade Surplus Grows – Helps to reinforce the Euro.
  • US Dollar Resilient despite Rise in Unemployment – Investors positive following uptick in wages.

The Euro US Dollar (EUR USD) exchange rate trended flatly this morning after tumbling last Friday as the latest Eurozone employment data showed that unemployment held steady in November.

Euro US Dollar (EUR USD) Stable as Unemployment Holds

The Euro traded relatively flatly this morning against the US Dollar as the Eurozone’s latest employment figures showed that the unemployment rate remained unchanged at a seven-year low.

Unemployment held at 9.8% as expected in November, down from 10.5% a year before. The result was largely thanks to Germany’s job market as unemployment held at 4.1%, its lowest rate since 1981, leading traders to remain optimistic that the Eurozone unemployment rate will continue to fall in 2017 at a similar rate to last year.

However Greece’s economy may drag on the single currency. Despite falling to 23.1, its lowest levels since March 2012, national unemployment remains significantly higher than in other European nations, with only Spain’s rate of 19.2 coming anywhere close.

Euro Strengthened by Rising German Trade Surplus

Germany’s latest Trade Balance report helped the Euro to strengthen this morning as the surplus in Europe’s largest economy rose faster than expected in November.

Germany’s trade surplus rose from €19.4bn to €22.6bn, outplacing expectations it would rise to €21.4bn and accelerating at a faster pace than last year.

The rise in Germany’s trade balance was largely caused by a rise in exports, increasing by 3.9% in November which helped to negate the previous month’s disappointing rise of only 0.5% and should help dispel fears of a slowdown in the Eurozone’s most important economy.

Wage Growth Bolsters US Dollar (USD)

Demand for the US Dollar rose on Friday despite a slight rise in unemployment from 4.6% to 4.7% in December thanks to an impressive rise in wages over the same period.

Investors were upbeat as wages surged from 2.5% to 2.9%, beating expectations that the figure would rise to 2.8% and rising at its fastest pace since 2009.

The slow rise of wages has long been a thorn in the side of the Obama admiration as despite a solid rise in employment since the financial crisis, wages have generally struggled to keep up.

The uptick in wages are also likely to help support the potential of US interest rate hikes later this year as the Federal Reserve has previously indicated that a strong job market and rising wages are key signs for a rate hike.

EUR USD Exchange Rate Forecast: US Consumer Credit May Bolster US Dollar

The EUR USD exchange rate may slide later following the release of the latest US consumer credit report, which is expected to show that credit rose from $16.02bn to $18.48bn in November.

Meanwhile, a lull in notable EU data until Thursday could see the Euro slide in the first half of the week, with the currency having little opportunity to rise unless it finds support from external factors.

Looking further ahead the ‘Greenback’ may continue strengthening over the next couple of weeks in advance of Donald Trump’s inauguration, potentially driving EUR USD to parity as markets remain optimistic about Trump’s stimulus plans.

Current Interbank Exchange Rates

At the time of writing the EUR USD exchange rate was trending around 1.05 and the USD EUR exchange rate was trending around 0.95.