Not only was there a political bang in the US yesterday, but also in Germany late last night. After Chancellor Olaf Scholz fired Finance Minister Christian Lindner, the so-called “Ampelkoalition” (a coalition between the Christian Democrats, the Social Democrats and the Greens) is now history, Commerzbank’s FX Analyst Antje Praefcke notes.
“Will the lights go out in Berlin now that the coalition has broken up? Hardly likely. The most likely scenario is a minority government followed by new elections in March. But even then, forming a government will likely be difficult. The euro has not yet reacted to the events in Germany. This could still happen when trading starts in Europe, as political uncertainty in the largest country in the euro zone is certainly not positive news for the single currency.”
“However, the consequences are likely to be limited. For a start, the political turmoil in Germany would have to lead to considerable negative economic consequences that have a significant impact on growth in the euro zone and thus influence the ECB's monetary policy to such an extent that it lowers the key interest rate more than expected. However, this is not to be expected (at least not at the moment).”
“The fact that the euro zone will only make sluggish economic progress in the coming months, due in part to weak growth in Germany, is likely to be already largely priced into the euro. As long as it is not clearly foreseeable that the euro zone will see lower trend growth in the future than previously expected, sustained losses in the euro are unjustified. As a result, the euro should only react briefly, if at all, to the news from Berlin, but should then quickly recover.”
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.