30, July 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

Practically the first time in two years, there was a decline in unemployment in Spain. It was a quite unexpected event. Unemployment fell from 27.2% to 26.3%. Despite optimistic statements of Spanish Prime Minister, who expects a speedy recovery of the economy, the improvement can hardly be called a turning point in the Spanish Employment Service. The reason for this is the fact that many Spanish citizens, who have lost hope of finding any job, are not registered on the exchange of labor, so the official statistics do not take them as part of the labor force.

Meanwhile, in Portugal shortages continue to aggravate. In the first half of 2013, the budget deficit jumped to 4 billion euro. Although the figure was only 1.7 billion euro in the same period of the last year. The reason is simple: the loss of tax revenue is due to the ongoing recession, and an increase in costs is due to social benefits (especially unemployment). According to the plan, by the end of the year, the deficit should not exceed 5.5%, but it's hard to believe.

Another indicator is the decline in lending in the EU, the 14th consecutive month. And this was in spite of record low interest rates the ECB. It is important to note that a significant contribution to the current negative situation was made by the banks that have tightened requirements for potential borrowers. It is quite reasonable that under conditions of high unemployment, banks are not willing to lend.