Why political instability in Germany is unlikely to hurt the euro

by Dramelin 6:00 AM 0 comments

The euro was under some pressure Monday following news that talks to form a new government in Germany had collapsed.
Market players, however, were somewhat relaxed over the ongoing political instability in Berlin, despite this being the first time since World War II that a general election had not led to a new government.
Kit Juckes, global head of FX strategy at Societe Generale, described the pressure on the euro as "not a dramatic reaction.
" In fact, the currency began retracting some of the earlier losses in mid-morning trade in Europe and the German stock exchange was modestly lower, down by 0.
"Germany`s strong and improving fundamentals provide some important insulation from political concerns.
In other words, the ship can effectively sail itself," Rabobank said in a note Monday.
Data released last week showed the German economy beating analysts` forecasts with a 0.
8 percent growth in the third quarter of the year.
At the same time, confidence levels among German businesses hit an all-time high in October and the unemployment rate remained at an historic low, Deutsche Welle reported.