After a year in which the euro was the best performing of all the major currencies, it got off to a flying start in 2018; with a high in Europe yesterday morning of 1.2077; the highest in over 3 years. It couldn’t sustain its very positive momentum throughout the day, however, and finished in New York around 20 pips below its best level. In Europe this morning the EUR has faded further to be down more than 60 pips from Tuesday’s high and threatens to be back below 1.20 for the first time since last Friday.
The modest pullback in the EUR comes despite a very good set of German labour market data. The seasonally adjusted jobless total dropped by 29,000 to 2.442 million; more than double the 12,000 consensus forecast. December's unemployment rate was 5.%, the same as a revised reading for November and the lowest level since German reunification in 1990, the office said. In 2017 as a whole, the rate fell to 5.7% from 6.1% the previous year. The detailed numbers showed Germany's workforce expanded last year to a record 44.3 million, whilst the Labour Office said there were 761,000 job vacancies in December, suggesting companies are struggling to find skilled workers quickly.
Of course, whilst the German data are very impressive, they have rather lost their power to surprise on the upside, given that expectations are already so elevated. On this second trading day of 2018, the EUR opens in North America at USD1.2050 and GBP/EUR1.1285. Germany’s December unemployment figures are published this morning but otherwise it’s a quiet day for economic data ahead of tomorrows PMI services reports.
On this first trading day of 2018, the EUR opens in North America at USD1.2010 and EUR/CAD1.5045.