Merkel in China to Strengthen Euro Outlook

German leader Angela Merkel is due for a trip to China as part of a German blue chip contingent. Given how the last weeks have played out in the markets, she will also take the opportunity to reassure Chinese leaders on the strength of the euro, and the positive outlook for the eurozone currently facing a crisis.

Two topics that are sure to come up are Spain and Greece. One is a pending item as Spain is yet to formally ask for a bailout, but sources have mentioned it is due any day as more provinces declare bankruptcy. Greece in the other hand has not meet the terms of the agreement which saw it receive bailout funds, but its waiting on a report by the Troika of IMF, ECB and European Council before the talks renew.

Germany’s Angela Merkel makes her second trip to China in half a year this week, hoping to strengthen booming trade ties and obtain assurances from Beijing that it will support the fragile euro zone by buying the bonds of its stricken southern members.

The relationship between the world’s top two exporters went through a decidedly chilly phase after Merkel received the Dalai Lama in Berlin in 2007, but she has toned down her criticism of China’s human rights record in recent years and shifted her focus to economic links.

In a sign of how much ties have improved, Merkel will be taking seven ministers with her for full-fledged consultations between the two governments, a format the countries launched last year and until recently was reserved for Berlin’s closest European partners.

The trip is the sixth to China since Merkel took office in 2005. She was in Beijing as recently as February, then hosted Chinese premier Wen Jiabao at the Hanover trade fair in April.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza