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Euro steady as Merkel gauges coalition move
The euro remained steady after German Chancellor Angela Merkel won a third term in office. Her conservative bloc took 42% of the vote, just short of an absolute majority. As a result, she is likely to seek a grand coalition with the Social Democrats (SPD), who won 26%.
Saxo Bank's John Hardy says the euro didn't move much as markets were expecting this result, and investors are now "waiting to see what sort of coalition emerges".
He adds that "any coalition is going to be awkward" and markets still have many questions around long term stability in Europe. He says that if the European Central Bank "doesn't do anything dramatic and new" to change to current situation, the euro won't get any weaker.
Mrs Merkel has already said she would be prepared to work with the Social Democrats (SPD) in a grand coalition, as she did in 2005-09. But the SPD, who would have preferred to enter a coalition with the Green Party, has been more reluctant to consider linking up with the CDU/CSU again.Germany is known as the "engine" of the eurozone, as its economy has been leading region out of recession. During the April to June quarter it grew by 0.7 percent.
Read more about John Hardy's predictions here:
http://www.tradingfloor.com/posts/german-elections-merkel-uncertain-euro-535641391
01:53 minutes
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