Forex Blog – Forex News & Currency Analysis

Friday was the day that saw the west humbled as both the US and European unemployment rates rise.  The US numbers were the most dramatic after a week which saw two pieces of information inflate the balloons of Forex traders banking on an interest rate hike only to have Friday’s dismal reality-check data stick a pin in it.

The US lost 85,000 jobs in December, more than analysts thought and higher than even the direst of predictions.

The data came on the heel of a positive November report which showed 4,000 jobs had been created – a number that was affirmed on Friday but obviously not the beginning of a trend.

What surprised the pundits more than anything was that so many jobs were lost in a month which is notorious for low numbers as employers usually reserve their layoffs until after the holidays so as not to appear too Grinch-like.

The fact that so many jobs were lost, bringing the national unemployment rate to 10.1%, is a sure sign that the recovery has yet to really pick up steam – spelling a rough first quarter for US Dollar prospects.

As for the Eurozone, their unemployment rate also went above 10% on Friday – the first time it has ever reached that since the European Union was established.  15.7 million People in the Eurozone are now on the books as unemployed; however analysts are speculating that the number is actually much higher given the poor accounting practices in some of the EU member states.

The Eurozone officially lost 102,000 jobs in December, which is the smallest loss of jobs reported in one month since July of 2008 – some say this is a milestone – however the situation on the ground seems to be getting worse.

A weekend report just stole the last bit of respectability that the EU had, by declaring that China has now overtaken Germany as the world’s largest exporter.

This fact was an eventual inevitability, but it happened now as a result of a poor labor and production market – not because China has gotten their act together.

The week will be bumpy for the USD and the EUR- in a duel between the two currencies, I would hedge myself against the Dollar as the mess in North America is more visible than in the EU.

Trade safe.