German Unemployment Reaches New Highs

Last updated 3/31/2009 4:31 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

German unemployment reached a new high printing at worse than expected increase of 69K versus forecast of 53K and the month’s prior reading of 40K. The news suggests that the collapse of global demand which has seen industrial Orders decline as much as 30% on a year over year basis is finally having a negative impact on the labor market.

German unemployment rate increased to 7.4% from 7.3% last month while the seasonally adjusted rate now stands at 8.10%. The unemployment report is yet another gloomy data point for Europe largest economy and suggests that the recession is becoming worse. ECB President Jean Claude Trichet noted on Monday that the economic outlook for the region is "surrounded by a high degree of uncertainty."

The unemployment news is sure to pressure the ECB to ease further at the upcoming rate policy meeting this Thursday. Market expectations are for a 50bp cut rather than the more typical 25bp cut that ECB usually favors. Given the rapidly deteriorating labor picture we believe that market consensus is correct and EZ rates will decline to 1%.

Despite the negative surprise on the unemployment front, the EUR/USD continued its slow and steady rise buoyed by renewed risk appetite in equity markets which staged a string recovery today. Nevertheless, the report should temper the upward movement in the pair as traders consider the wider implication of today’s data on consumer demand and GDP growth going forward.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.