Week in FX Europe – Higher European Unemployment Could Force ECB to Cut Rates

France and Spain published record high unemployment as more people there look at the government for solutions to a prolonged crisis which is not helped by austerity measures. French president Francois Hollande has seen his popularity dropped after the figures came out as there is no clear plan of action from his government. Spain has the highest unemployment rate at 27% and has seen a reduction of its population as immigrant and Spanish nationals exit the country looking for better opportunities abroad.

In the UK the GBP recovered after the gross domestic product for the first quarter of the year showed a 0.3% growth. That broke the trend of contraction that had the British economy on the verge of a triple-dip recession. The pound advanced 1.67% versus the USD and 1.937% versus the EUR during the week.

Overall economic conditions in the Eurozone continue to deteriorate and senior sources at the European Central Bank have hinted that the next policy meeting might be the one where the bank cuts interest rates to boost economic recovery.

• Spain Increases Economic Contraction Forecast to 1.3%
• Bundesbank Criticises ECB Plan to Buy in Crisis States Debt
• Germany denies negative impact from austerity
• French Unemployment Hits Record High
• ECB Asmussen Cautions About Effects of Rate Cuts
• UK GDP Grows 0.3% Avoid Triple Dip Recession
• Spain Unemployment Rises Over 27% Highest in 37 Years
• Fitch Downgrades Bank of England to AA+
• ECB Closer to Rate Cut as Soon as Next Week
• UK Retail Sales Fall in April
• Enrico Letta is Nominated for Italian Prime Minister
• German Business Confidence Falls in April
• Merkel Outlines European Economic Diversity
• Merkel Calls Austerity Balancing the Budget
• Spanish 3-Month Borrowing at Lowest Levels
• Spain Shrinks as 200k Immigrants Return to Home Countries
• EU: Austerity Era Has Run Its Course
• PM Rajoy Under Pressure to Ease Record Unemployment

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