EUR under pressure from German politics

The euro was sold in early Europe, and marginal new lows were recorded (~$1.1715) as German politics remains the chief talking point, accoridng to analysts at BBH.

Key Quotes

“The German President is sounding out the different parties to see if there is a possibility of a coalition. Initial surveys suggest Merkel is in tune with the public in preferring new elections to a minority government. Both options are unusual for modern Germany.”

“We suspect talk of the end of Merkel's tenure is greatly exaggerated. Survey suggest Merkel's CDU will remain the largest party, and within the CDU, there does not appear to be a compelling alternative. At first, it seemed that a minority government would be preferable to new elections. The fear seemed to be that new elections would see the AfD bolstered, but the initial poll suggests this is not the case. The FDP is seen as a somewhat irresponsible and may suffer on its leader's gamble. The Greens appear to have won a few new supporters.”

“Investors do not seem to think that the unsettled political scene is a threat to the stability of economic performance in Germany. The DAX gapped lower yesterday and quickly filled the gap to close 0.5% higher. It is extending those gains today to trade at a five-day high. Technically, we see immediate scope for another 0.5-1.0% gain.”

“The euro may be helped by some cross-rate gains. Concern about house prices and weak interbank rates continue to weigh on the Swedish krona. The euro surged above SEK10.0 for the first time since last November. We note that the three-month interbank rate Sweden fell to a record low yesterday. Ironically, while the Swedish krona is the weakest of the major currencies today, the Norwegian krone is battling the Aussie for the top position, and this is even though three-month interbank rates also fell to record lows yesterday.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.