Harvey Blackwood: Euro Recovers After German Coalition Talks Fail

Harvey Blackwood: Uncertainty clouds Germany's political future after Chancellor Merkel's failure to form a three-way coalition sends euro to two-month low against the yen

Harvey Blackwood: The euro rebounded from a two-month low against the yen this week, with investors pushing aside concerns over political uncertainty following German Chancellor Angela Merkel’s failure to establish a coalition government.

Merkel, whose conservatives’ position was reduced after they won a September election with fewer seats, stated that she would advise the German president that she is unable to form a coalition after the Free Democrats exited the discussions.

The withdrawal of the pro-business Free Democrats from the coalition negotiations threw Germany into a political quandary that raised concerns among investors that a new election would take place in the event Merkel is unable to form a minority government.

The Euro recovered by as much as one percent after selling off sharply in early trade in Asia and sliding to its weakest since mid-September this year.

A currency analyst at Harvey Blackwood stated that it was normal for Asian trading to be somewhat less liquid following weekend events and that that could emphasize the scale of movement within the markets.

In the event of another election in Germany, the far-right, anti-immigrant Alternative for Germany (AfD) could gain more support and supplement the 13 percent of votes it won in September this year. However, the parliamentary requirements to approve another election are considered to be quite stringent, requiring more than a single round of voting in the German parliament.

Harvey Blackwood analysts stated that while there is uncertainty regarding what will happen next in Germany, they do not anticipate a dramatic change in the value of the euro.

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Source: Harvey Blackwood


Categories: Politics, Foreign Government, Currency

Tags: euro, germany, Harvey Blackwood, HarveyBlackwood, Merkel

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