Week in FX Europe – Merkels Win No Slam Dunk

On this side of the Atlantic it has been eerily quite about this Sunday’s German federal election. It’s has always been considered a Merkel done deal. It most probably is, however event risk does appear and it should. The German election is seen as an indicator of Europe’s future, but as many analysts have noted, Europe has rarely been mentioned. The obvious reason being that all the parties agree with Merkel’s stance of “no alternative to the government’s rescue operations.” It would be difficult to argue with this – to date Merkel’s policies have worked.

A continuation of the center-right coalition or a grand coalition is considered the punters best outcome. The Euro observers are also interested in whether the AfD party will achieve the parliamentary mandate of +5% – the polls say “Ja.”

It seems that the majority expects Merkel to take the reins again come Sunday evening – she could win with another junior coalition partner, but there is an equal chance of her winning a “grand coalition.” However, if she fails to achieve the parliamentary threshold and form a coalition government, it’s back to the drawing board where much haggling will occur.

A Grand coalition is positive for Europe, while a center left coalition is probably slightly negative. No matter what, by Monday morning most of us will have a better understanding of German politics.

• Greek Quarterly Unemployment Drops For First Time in Four Years
• Turkey and India Lead Emerging Market Rally
• Berlusconi Vows to Remain in Politics
• French PM Admits Taxes Are Too Much
• UK Retail Sales Fall 0.9 Percent in August
• UK Factory Order Books Recover to Pre Crisis Levels
• Greek Finance Minster Says Economy Moving Slowly Towards Recovery
• Ireland Officially Exits Recession
• ECB is Concerned about Market Confusion over Stress Tests
• S&P: Europe’s Recovery is Slow
• BoE Minutes Show Central Bank Not Planning Further Stimulus
• Survey Shows Fund Managers Are Investing in European Equities
• Merkel Poised to Win Elections But Who Could Follow Her When She Steps Down
• UK Productivity Lagging G7 Benchmark
• EU ready for talks with China on Investment Deal
• Bank of England Warns About Rising House Prices
• Greek Prime Minister Expects Recovery in 2019
• UK Inflation Falls to 2.7 Percent in August
• European Car Sales Fall 5 Percent in August

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