German unemployment data surprised to the upside rising by only 5K versus 17.5K helping to keep EURUSD buoyed in early European trade as the pair inched its way towards the 1.3000 level. The labor statistics improved across the board. The number of payroll jobs rose by 2K in October after contracting -8K in September. Job vacancies were -2K in November versus -7K in October and seasonally adjusted unemployment rate remained at 6.9%.

The news was a breath of fresh air for the German economy which has shown serious signs of stress over the past several months as the recessionary forces in the periphery appeared to be spreading towards the core of Eurozone. However, the latest batch of statistics including last week’s PMI and IFO data and today’s unemployment report have shown that the economic activity in Germany may have stabilized though it is not yet expanding.

The euro has held its ground well in morning European dealing rising to 1 high of 1.2980 as it tries to make another run for the key 1.3000 level. Much of its direction will likely depend on the latest news from Washington DC were the ongoing budget negotiations over the Fiscal Cliff have dominated markets attention creating a seesaw in risk sentiment with every new comment from elected officials. For now however, the combination of positive economic news and optimism over a deal in DC are keeping the pair bid.