Eurozone: Lowest unemployment rate at 9.6% since 2009 - BBH

Analysts at Brown Brother Harriman noted that unemployment in the region fell to 9.6% in December from 9.7% in November, which had been revised from 9.8%. It is the lowest unemployment rate since 2009. The eurozone unemployment rate stood at 10.4% in December 2015 and 11.3% in December 2014. In terms of national figures, German unemployment fell to a new post-reunification low of 5.9%, while Italian unemployment disappointed at 12% in December after the November series was revised to 12.0% from 11.9%.

Key Quotes

"EMU reported growth, inflation, and unemployment today. Growth in Q4 was in line with expectations for a 0.5% expansion, after 0.4% in Q3 16. The year-over-year pace was steady at 1.8%. Details were lacking, but national figures from France, Spain, and Austria show that it was not simply a German story. Unemployment and CPI were the surprises."  

"Eurozone consumer inflation jumped to 1.8% in January. The median forecast in the Bloomberg survey was 1.5% after December had accelerated from November (1.1% and 0.6% respectively). Some claim that this will intensify the debate at the ECB. We are less convinced." 

"First, the ECB decided less than six weeks ago to extend its asset purchases through the end of the year, albeit at a 60 bln euro a month pace rather than 80 bln that prevail for the next two months. It is too early to review it as it has not even been implemented. Second, the rise in headline CPI is largely a function of higher energy prices. The core rate was stable at 0.9%, and despite the headline increase, the core has been in a 0.8%-0.9% range since last May. Third, those who were opposed to QE and its extension are not about to change their minds, but the data is unlikely to persuade others."  

"The Euro posted an outside day yesterday, trading on both sides of last Friday's range.  However, the close was neutral. It is trading in a narrow range (less than half a cent) holding on to the recovery in the North American morning. The euro's upside momentum after a five-week advance stalled near $1.0770 last week. Yesterday's initial losses saw the euro trade down to $1.0620, the lowest level since January 19. Below there, support near $1.0580 likely marks the trading range."  

EUR/USD: Stay long for 1.0810