Announced before the scheduled afternoon conference call, Microsoft officials released the finer details of the company’s quarterly report.  Falling slightly short of analysts’ estimates, the dour news came when it was revealed that the software company would be laying off 5,000 employees or slightly above 5 percent of its total work force.  Granted, the release is nothing of a surprise compared to the myriad of US firms announcing cutbacks in recent months.  However, this announcement carries significant weight as it is the first companywide campaign in the firm’s 30 plus year history.

Now, the figure may well not make or break a non-farm payroll Friday, but it continues to hammer at the increasingly pessimistic employment environment that is currently hovering over the world’s largest economy.  The sentiment will likely play out against the major currencies, especially the Euro.

Against the Euro

Given the bleak US outlook, interest rate speculation will more than likely be expected as the Federal Reserve will once again need to turn to the numerous options that can be employed in supporting economic growth.  With the possibility of a zero interest rate policy, greenback bearishness would be likely as the move could be seen as more of a sign of weakness rather than strength in these troubled times.  Additionally, Euro policy heads will likely look towards the second quarter of 2009 for any further rate cuts, as they await any positive or negative results from the recent spate of reductions in 2008.  The notion should keep temporary demand for euros healthy as rates continue to remain lofty in comparison to other G7 economies.  The caveat, however, remains in the recent credit downgrades in euro partners (ie Greece, Ireland, Spain and Portugal) and continued weakness in German manufacturing activity.  Further downgrades in national credit ratings will likely shift emphasis on the fact that the ECB shouldn’t be concerned with inflation but with overleveraged economies.

Technically

Euro bullishness remains supported above the 1.2432 November 20th low, currently trading at 1.2981.  Should the barrier hold, it would coincide with a building convergence in the MACD and a creeping golden cross via stochastics that support the notion of short term euro demand.  The idea would keep short term targets at the 1.3256 January 6th spike low intact with secondary sites on the 1.3242 October 5th low.

Tags: Euro, Microsoft Layoffs

This entry was posted on Thursday, January 22nd, 2009 at 9:23 pm and is filed under Euro, US Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.