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Forex pairs in this Article » EUR/USD, EUR/JPY, EUR/CHF
Talking Points:

- German Unemployment Rate Drops to 6.8% in January.

- German Unemployment Change beats expectations at -28K.

- EURUSD maintains $1.3600 at the time of writing.

The German labor market report for January beat expectations, with the Unemployment Change decreasing by -28K (or in other words, the economy added +28K jobs), well-below economists’ forecasts calling for a drop of -5K. The German Unemployment Rate was revised to 6.8% from 6.9% in the month of December, and was reported at 6.8% in the month of January. Overall, the report looks strong based on the headline figures alone.

These strong numbers come at an uncertain time for the Euro-Zone. The Euro-Zone money supply growth slowed to 1.0 percent – the slowest pace since September 2010, and fueling the argument that Europe is facing deflation risk, according to DailyFX Chief Currency Strategist John Kicklighter. However, in absence of a crisis, there is an argument to be made that the ECB will opt for a softer solution than another outright liquidity injection.

EURUSD 5-Minute Chart. January 29, 2013 Intraday

EURUSD_Fighting_for_13600_Despite_German_Labor_Data_Beat_body_x0000_i1027.png, EUR/USD Fighting for $1.3600 Despite German Labor Data BeatCharted created by David Maycotte using Marketscope 2.0.

The EURUSD was relatively unchanged around the release of the German labor data, having fallen by 12-pips to $1.3610 at the time of writing. The EURUSD was only about 50-pips lower than its pre-FOMC level, but was being pressured lower by the release of the ECB’s 4Q’13 Bank Lending Survey, which showed rather dour economic conditions despite a steadying in credit growth (albeit at a low level).

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